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ICE Sugar Prices Edge Lower Amid Strong Dollar and Improved Supply Outlook

18 Jan 2025 10:20 am
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Mumbai, 18 Jan (Commoditiescontrol): Sugar prices declined on Friday, pressured by a stronger U.S. dollar and weaker crude oil, with futures trading just above recent lows.

ICE sugar futures dropped 0.19 cents, or 1.03%, to settle at 18.22 cents per pound, after hitting a 4.5-month low of 17.92 cents earlier in the week. London white sugar also fell, ending $6.40 lower at $478.60 per ton, after touching $470.50, its weakest level since September 2021.

The market had briefly recovered on Thursday due to short covering, particularly in London sugar, where funds hold a significant short position. The Commitment of Traders (COT) report revealed that funds increased their net short positions to a five-year high of 2,515 contracts as of January 7, contributing to Thursday's rally.

Sugar prices have trended downward over the past three months due to improved global supply prospects. On November 21, the International Sugar Organization (ISO) reduced its 2024/25 global sugar deficit forecast to 2.51 million metric tons (MMT), down from an earlier estimate of 3.58 MMT. Additionally, the ISO raised its 2023/24 global sugar surplus projection to 1.31 MMT from 200,000 metric tons previously.

Market dynamics are also being shaped by developments in India, the world’s second-largest sugar producer. Reports suggest the government may raise ethanol prices, which could impact sugar production as more sugarcane is diverted for ethanol. India is also expected to approve sugar exports of up to 1 million metric tons, but concerns over declining domestic output persist. From October to December, India’s sugar production fell 15.5% year-on-year to 9.54 million metric tons, according to the Indian Sugar and Bio-Energy Manufacturers Association (ISMA).

Thailand, the third-largest producer, is projected to increase its 2024/25 sugar output by 18% to 10.35 million metric tons, up from 8.77 million last season. However, the suspension of sugar syrup exports to China and delays in shipments due to factory inspections have added uncertainty to the global market.

Technically, sugar prices remain volatile, with analysts identifying support at 18.01 and 17.79 cents per pound and resistance at 18.45 and 18.67 cents. Other key factors, including weather conditions in Brazil, ethanol trends, and policy changes in major producing countries, are expected to influence prices in the coming weeks.

Despite increased production in Thailand, concerns over India’s reduced output and tight global supplies continue to keep traders cautious, maintaining a delicate balance in the sugar market.

(By Commoditiescontrol Bureau: 09820130172)


       
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