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ICE Raw Sugar Retreats From 2-Yr High As Oil Dips; Firm USD Sparks Liquidation

24 Jan 2020 7:35 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE fell back on Thursday after climbing to a two-year high earlier. Prices settled lower Thursday as NY sugar fell back from a new 2-year high on sharp fall in crude oil prices and long liquidation pressure.

March raw sugar ​​settled lower 0.6%, or 9 cents, to $14.57​​ cents per lb, retreating from a two-year high of 14.90 cents set earlier in the session. March white sugar settled lower 0.8%, or $3.20, at $403.80 per tonne, after scaling a peak of $411.50, the highest for the front month since June 2017.

Dealers said weakness in crude oil prices helped halt the advance in prices, as well as broader economic concerns linked to the spread of a respiratory virus in China.

A rally in the dollar index on Thursday to a 1-month high sparked long liquidation pressures in sugar futures. Sugar prices have rallied sharply over the past two weeks on aggressive fund buying due to the outlook for smaller global sugar supplies.

Dealers noted the potential for increased output if there was a significant shift in the relative profitability of sugar and biofuel ethanol, both of which are produced from cane in regions such as Center-South Brazil.

"That extra sugar though is likely to be mostly notional until later in 2020, and thus is not an immediate handbrake on further price gains," Commonwealth Bank of Australia analyst Tobin Gorey said in a market note.

Malaysia's top sugar refiner said it would increase purchases of the commodity from India, which, according to two sources, is part of efforts to placate New Delhi amid an ongoing spat over palm oil imports.

Support and Resistance for Sugar #11 lies at 14.26 cents and 15.06 cents, respectively.

(Commodities Control Bureau)

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