Mumbai, 3 Apr (Commoditiescontrol): ICE raw sugar futures settled marginally lower on Tuesday, as signs of stronger sugar production in India sparked long liquidation.
Putting a floor under prices, Global oil benchmark Brent prices stayed high as supplies faced fresh threats from escalating conflict in the Middle East. Higher oil prices prompts diversion of cane crushing for ethanol and thus curbing sugar supplies.
ICE sugar futures for May delivery settled down 0.40 cents or 1.8% at 22.32 cents per lb, having hit the highest since end-February at 22.91 cents. Prices rose 3.1% last week.
May London ICE white sugar contract lost $8.60 or 1.3% at $643.90 a metric ton, coming off 1-month high recorded in the previous week. The contract added 2.13% during just ended week.
The Indian Sugar and Bioenergy Manufacturers Association reported Tuesday that India's 2023/24 sugar production from Oct-Mar rose 0.4% on year to 30.2 MMT as more sugar mills stayed open to crush sugarcane. As of March 31, 322 Indian sugar mills had closed operations, compared with 346 mills that were closed at the same time last year.
Sugar prices initially climbed to 1-month highs on strength in crude prices. Crude prices rallied to a 5-1/4 month high, which benefits ethanol prices and may prompt global sugar mills to divert more cane crushing toward ethanol production than sugar, thus curbing sugar supplies.
Meanwhile, the weather has dried up in Brazil's Centre-South region after the rains last week, so more mills are likely to start their sugarcane processing operations for the season.
Last week, sugar price were pressured by higher sugar production reported by the world's largest exporter Brazil. Unica reported that Brazil's Center-South sugar output in the first half of March was 64,000 MT, up 313% from the same time last year. Also, Brazilian sugar output so far in the 2023-24 marketing year through mid-March is up 25.8% on year to 42.245 MMT.
"Brazil may have a strong early harvest, which may be bearish in the short term, but harvested cane volumes may disappoint later in the year," Rabobank said in a report.
Brazil's sugar mills have ramped up their cane crushing for more sugar and less ethanol. Mills have crushed 48.96% of total cane for sugar production this year, up from 45.93% last year.
Later, sugar gained support as US producers called for a reduction in sugar imports from Mexico. The American Sugar Coalition wants the government to lower the amount of sugar Mexico can send to the US by 44%, which would likely boost prices and require the US to purchase sugar from other countries, tapping already tight global sugar supplies.
ASR Group, the largest sugar company in the United States, has six to eight weeks of raw sugar stocks at its Baltimore sugar refinery, which is supplied by vessels coming to the Port of Baltimore. The port is blocked after the collapse of a bridge.
The Baltimore refinery is one of the largest plants in the country, producing 6 million pounds of refined sugar per day.
Egypt on Monday extended the deadline for offers in its latest tender for 50,000 metric tons of raw cane sugar to March 30 from March 23.
Last week, Fitch Solutions report suggested that the decreased sugarcane plantings in key Indian states, alongside an anticipated reduction in Brazil's centre-south region production for the 2024/25 season, are supporting sugar prices. It added, however, that current strong production out of Brazil is capping sugar's gains.
Commodity Futures Trading Commission (CFTC) data on showed speculators have reduced 5,465 contracts to their net long position in raw sugar to 8,011 lots.
For Wednesday, support for the May Sugar contract is at 22.09 cents and 21.86 cents, with resistance at 22.73 cents and 23.14 cents.
(By Commoditiescontrol Bureau: 09820130172)
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