Mumbai, 28 Feb (Commoditiescontrol): ICE raw sugar prices advanced further on Tuesday, on positive carryover from Monday when a private forecaster raised concerns over India's production prospect. Sucden predicted India's 2024/25 sugar production to fall 15.3% on year to 28 MMT. Further, a softer dollar aided the rise of natural sweetener price.
ICE sugar futures for March delivery settled up 0.69 or 2.98% at 23.84 cents per lb. Last week, the contract hit its lowest since mid-January at 22.71 while losing 3.9% week on week.
May London white sugar contract rose $7.20 or 1.15% at $631.57 a metric ton. March contract which expired last Wednesday and witnessed a total of 261,950 metric tons of white sugar tendered.
Dealers said the market continued to derive support from concerns that lower rainfall in the key Centre-South region of Brazil would lead to a decline in cane production in the coming 2024/25 season.
Tereos on Monday forecast that the cane crop would fall below 600 million metric tons from 660 million in 2023/24 because of insufficient rain.
Traders said that open interest in the spot month is still high at over 47,000 lots with only two trading days left before the expiry.
Stronger than expected sugar production in Thailand, however, has helped to keep a lid on prices.
In fact, for entire previous week the sugar complex maintained softer tone with sugar price dropping to one-month low, as significant increase in Brazil's sugar production applied pressure. The forecast was responsible for setting a negative tone.
Dealers said there was concern that lower rainfall in the key Centre-South region of Brazil would lead to a decline in production in the upcoming 2024/25 season.
Sucden forecast 2024/25 CS Brazil sugar output would total 40.8 million tons, a year-on-year decrease of 1.8 million tons.
French sugar producer Tereos expects Brazil's CS new sugarcane crop at under 600 million tons compared to 660 million tons in 2023/24.
Raw sugar prices are expected to post an annual gain of nearly 20% in 2024, a Reuters poll showed.
Earlier this month, Sugar prices surged to multi-month higher finding support from consulting firm Safras & Mercado cutting its 2024/25 Brazil Center-South sugar cane crush estimate to 650 MMT from earlier forecast of 670 MMT, citing drier-than-normal conditions.
Analyst Green Pool downgraded its forecast for the 2024/25 cane crop in CS Brazil late last week, saying that some yield potential had already been lost.
StoneX raised its 2023/24 global sugar surplus estimate to 3.4 MMT from a previous estimate of 730,000 MT due to increased sugar output in Brazil.
The global sugar deficit is expected to widen to 788,000 tons in the 2024/25 year, meaning supplies will remain tight and prices are likely to stay high, analyst Green Pool said on Tuesday in its initial forecast for the crop year.
Last Friday, India allowed mills to convert 1.7 million metric tons of sugar for ethanol production but there were no plans to divert more sugar.
Meanwhile, Indian Sugar Mills Association (ISMA) reported that India's 2023/24 sugar output during the Oct -Jan 31 period fell 3.2% on year to 18.7 MMT.
Brazil exported 75% more sugar in December from a year ago, the government said. Thailand is expected to produce 8-8.5 million tonnes of sugar in the 2023/24 production year.
Trading Commission (CFTC) data on showed speculators have added 5,950 contracts to their net long position in raw sugar to 13,107 lots.
For Wednesday, support for the May Sugar contract is at 22.24 cents and 21.81 cents, with resistance at 23.03 cents and 23.39 cents.
(By Commoditiescontrol Bureau: 09820130172)
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