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Raw Sugar Prices Rebound Amid Short-Covering Rally and Supply Concerns

17 Jan 2025 9:25 am
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Mumbai, 17 Jan (Commoditiescontrol): Sugar prices posted moderate gains on Thursday, recovering from recent lows as a weaker dollar triggered short-covering in the futures market. A large short position held by funds in London sugar contributed to the rally. Data from the Commitment of Traders (COT) report showed funds increased their net short position in London sugar to a five-year high of 2,515 contracts as of January 7.

ICE sugar futures rose 0.40 cents, or 2.22%, to settle at 18.41 cents per pound. This recovery came after prices hit a 4.5-month low of 17.92 cents on Wednesday. London’s white sugar also rebounded, closing up $12.50, or 2.6%, at $485.00 per ton after hitting a low of $470.50 earlier in the week, its weakest level since September 2021.

Market sentiment was influenced by developments in India, the world’s second-largest sugar producer. Local reports suggested the Indian government may soon decide on raising ethanol prices, as ethanol production—mostly derived from sugarcane—can reduce sugar output. Additionally, India may approve sugar exports of up to 1 million metric tons. However, skepticism lingers due to a sharp drop in domestic production. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) reported that sugar output from October to December declined 15.5% year-on-year to 9.54 million metric tons, which could lead to continued export restrictions.

Meanwhile, Thailand, the world’s third-largest sugar producer, is expected to boost production by 18% in the 2024/25 season. The Office of the Cane and Sugar Board projects output will rise to 10.35 million metric tons, up from 8.77 million last season. However, Thailand has suspended sugar syrup exports to China, while inspections of Thai factories are delaying shipments, adding further uncertainty to the global market.

Technically, sugar prices remain volatile. Analysts identified support levels at 18.11 and 17.81 cents per pound, with resistance at 18.71 and 19.01 cents. Other factors, including weather in Brazil, ethanol trends, and policy updates from major producers, will likely influence prices in the coming weeks.

Despite bearish factors like increased Thai production, concerns over India’s reduced output and tight global supplies are keeping traders cautious, maintaining a fragile balance in the market.

(By Commoditiescontrol Bureau: 09820130172)


       
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