Mumbai, 23 Jan (Commoditiescontrol): Raw sugar futures surged on Wednesday, buoyed by short-covering as the Brazilian real strengthened. A stronger real typically discourages export selling by Brazilian sugar producers, lending support to global sugar prices.
The March raw sugar contract on ICE rose by 0.37 cents, or 2.08%, to close at 18.16 cents per pound. This came after the contract hit a five-month low of 17.57 cents in the prior session. Similarly, London white sugar gained 2.4%, or $11.20, to settle at $477.60 per metric ton, recovering from a two-year low of $462.60 reached on Tuesday.
The recent dip in sugar prices has been attributed to an improved global supply outlook. India, the world's second-largest sugar producer, announced it would permit the export of 1 million metric tons (MMT) of sugar this season. This follows the export restrictions imposed in October 2023 to secure domestic supplies. During the 2022/23 season, India exported just 6.1 MMT, significantly lower than the record 11.1 MMT the previous year. Analysts at Commerzbank noted that while India's export quota remains limited, it contributes to a more favorable supply situation, preventing further price declines.
In addition, Brazilian sugar production has not decreased as significantly as initially feared. Thailand, the world's third-largest sugar producer, is also expected to boost production by 18% to 10.35 MMT in the 2024/25 season. Meanwhile, the International Sugar Organization (ISO) revised its global sugar deficit forecast for the 2024/25 season downward to 2.51 MMT, compared to an earlier estimate of 3.58 MMT. The ISO also raised its 2023/24 surplus estimate to 1.31 MMT from 200,000 metric tons.
From a technical perspective, analysts highlighted key support levels for raw sugar at 17.84 and 17.52 cents per pound, with resistance at 18.38 and 18.60 cents. Moving ahead, weather conditions in Brazil, ethanol price trends, and policy decisions in major producing countries are likely to play a significant role in shaping market trends.
(By Commoditiescontrol Bureau: 09820130172)