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ICE Sugar Prices Hit Multi-Month Lows Amid Improved Supply Outlook

14 Jan 2025 9:55 am
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MUMBAI, 14 Jan (Commoditiescontrol): Raw sugar futures on ICE dropped to a four-month low on Monday, pressured by a stronger U.S. dollar and favorable weather conditions for Brazil’s upcoming cane crop.

The March raw sugar contract settled at 18.90 cents per pound, down 0.32 cents or 1.7%, after touching 18.70 cents earlier in the session. This marks a weekly loss of 2.2%. Similarly, London’s March white sugar contract fell by $7.10, or 1.4%, to $496.40 per metric ton, briefly dipping to $492.70, its lowest level in nearly two years.

Market sentiment was weighed down by improved sugar supply expectations. In Brazil’s Centre-South region, recent rainfall has boosted projections for the 2024/25 sugarcane crop. Thailand’s production is also on the rise, coupled with increased restrictions on liquid sugar shipments to China, which could further enhance global sugar availability.

Adding to the bearish tone, the U.S. dollar reached a two-year high, dampening demand for dollar-denominated commodities like sugar. Over the past three months, sugar prices have steadily declined due to improving global supply forecasts.

The International Sugar Organization (ISO) recently updated its 2024/25 deficit projection to 2.51 million metric tons (MMT), down from an earlier estimate of 3.58 MMT. The surplus estimate for 2023/24 was raised significantly to 1.31 MMT from 200,000 metric tons. This revision reflects a more optimistic supply scenario for the global sugar market.

The USDA’s January WASDE report also highlighted record U.S. sugar production of 9.40 million short tons, strengthening domestic supply. Globally, the report indicated a complex landscape with mixed production trends across key regions.

Sugar output in Brazil's Centre-South region declined 5.1% year-on-year to 39.71 MMT by mid-December 2024, due to fewer operational mills. However, favorable weather conditions are expected to improve sugarcane processing, with projections reaching 620 million tons in the 2024/25 season.

India's production dropped 15.5% year-on-year to 9.54 MMT between October and December 2024, raising speculation about continued export restrictions, which could tighten global supplies.

Thailand’s production is forecasted to rise by 18% year-on-year to 10.35 MMT for the 2024/25 season. Meanwhile, higher output in China is expected to reduce the country’s reliance on imports.

Technical indicators suggest that raw sugar prices may find support at 18.66 and 18.42 cents per pound, with resistance levels at 19.18 and 19.46 cents. Analysts anticipate short-term volatility as the market balances improving supply forecasts with uncertain demand dynamics.

With global production trends showing divergence across regions, sugar prices are likely to remain under pressure in the near term. However, potential supply constraints from key exporters like India could introduce volatility, keeping market participants cautious.

(By Commoditiescontrol Bureau; +91 98201 30172)


       
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