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Weekly: ICE Raw Sugar Closes the Week over 9-Month on Short Covering

9 Dec 2019 7:22 am
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MUMBAI (commoditiescontrol)-Raw sugar prices on the Intercontinental Exchange hit its highest in nine months on Friday as Funds covered short positions amid squeezing supplies and producers scaled back selling.

The most tracked, Sugar no 11 or the March raw sugar was up 0.10 cents, or 0.76%, at 13.18 cents per lb after rising to a peak of 13.21 cents, the highest since late February. March white sugar rose $2.00, or 0.6%, to $347.30 a tonne.

Dealers said funds continue to cover net short positions amid tightening supplies, adding that momentum remained to the upside even if producer-selling of excess stocks would slow the advance. Producer-selling currently sits above 13.18 cents, they said.

A global sugar deficit is widely forecast for the current 2019/20 season and there are some signs there could also be a deficit in 2020/21.

Experts forecast 2019-20 CS Brazil sugar production at 26.5M MT TQ, broadly in line with last year’s production, while a marginal rise in consumption has been estimated for the year.

The FAO Sugar Price Index rose the Month of November by 1.8 percent, buoyed by mounting indications that world sugar consumption in the coming year will surpass production – which is being hampered by less-than-ideal growing conditions in Thailand, India, France and the United States of America.

The Indian Sugar Mills Association (“ISMA”) reported that all India sugar production up to 30th November 2019 was 1.88M MT WV, -53% lower year on year compared to the 3.97M MT WV of sugar production at the same time a year ago.

According to the Australian Sugar Milling Council (“ASMC”), during the week ending 4th December 2019, Australia sugar mills crushed only 0.25M MT of cane, taking the cumulative sugarcane crush for the season to 29.9M MT, or -7% lower YoY.

In its bi-annual sugar report released on 21st November 2019, USDA has forecast the global 2019/20 sugar production to drop 3.2% year on year to 174.1 MMT. The report indicated that global 2019/20 sugar ending stocks will fall 9.9% y/y to 49.58 MMT. USDA has projected the global 2019/20 sugar consumption to climb 0.8% y/y to 174.684 MMT.

While ISO on Tuesday raised its global 2019-20 sugar deficit estimate to -6.1 MMT from the previous estimate of -4.8 MMT.

A rally in Brazilian Real to a 3-Week high against the dollar is another bullish factor for sugar.

The latest CFTC data for the week ending 03 December showed that managed money traders continued to reduce their short position. This week they reduced their net short position by 30,190 contracts to 95,115 contracts. Whereas trade added 18,496 contracts to their previous week's net short position to 1,13,910 contracts.

Even On the technical charts, sugar maps a bullish trend. Support for the Sugar No. 11 March lies at 12.75 and 12.55 and resistance at 13.25 and 13.70.

(Commoditiescontrol Bureau)

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