ICE Sugar Futures Recover as Export Concerns Ease, Short-Covering Boosts Market

Mumbai, 25 Jan (Commoditiescontrol): Sugar futures on the Intercontinental Exchange (ICE) rallied on Friday, supported by reduced fears of surplus supplies and short-covering activity.

The March raw sugar contract rose 1.8%, settling at 19.02 cents per pound, recovering from a five-month low earlier in the week. Similarly, London white sugar climbed 2.32%, or $11.30, to close at $498.20 per metric ton, rebounding from a two-year low of $462.60.

The market saw a shift in sentiment after Indian sugar traders faced challenges in signing export contracts. New Delhi had approved the export of 1 million metric tons (MMT) of sugar, but rising domestic prices and declining global prices dampened export profitability. Before this approval, Indian sugar prices were significantly lower than global rates, enabling profitable exports. Post-approval, domestic prices surged, reducing competitiveness.

Short-covering activity also fueled the rally, as commodity funds held historically large net-short positions in sugar futures. The latest Commitment of Traders (COT) report revealed that funds had increased their net-short New York sugar positions to a five-year high of 106,045 contracts as of January 14. Similarly, net-short London sugar positions rose to 18,708 contracts, the highest in five years, as of January 21.

Global supply dynamics added to the complex market picture. India, the world’s second-largest sugar producer, is now exporting after limiting shipments in October 2023 to safeguard domestic supplies. While the current export quota of 1 MMT is modest compared to the 6.1 MMT exported in the 2022/23 season, it has helped stabilize global supply concerns. Elsewhere, Brazilian sugar production has exceeded expectations, and Thailand is forecast to boost sugar output by 18% to 10.35 MMT in the 2024/25 season.

The International Sugar Organization (ISO) revised its global sugar deficit forecast for 2024/25 to 2.51 MMT, down from an earlier estimate of 3.58 MMT, while raising the 2023/24 surplus projection to 1.31 MMT. Analysts pointed to technical support levels at 18.72 and 18.41 cents per pound, with resistance at 19.24 and 19.45 cents.

Looking ahead, weather patterns in Brazil, ethanol pricing, and policy developments in major sugar-producing countries will remain critical factors influencing market trends.

(By Commoditiescontrol Bureau: 09820130172)