MUMBAI (commoditiescontrol)-Raw sugar prices on the Intercontinental Exchange hit its highest in thirteen months on Friday supported by strong financial markets and funds short covering amid squeezing supplies.
The most tracked, Sugar no 11 or the March raw sugar was up 0.32cents or 2.43% for the week at 13.50 cents per lb. March white sugar rose $6.80, or 1.96%, to $354.30 a tonne.
Tuesday's WASDE report was bullish for sugar as the USDA cut its total U.S 2019/20 sugar production estimate by -3.8% to 8.28 NMT from last month's estimate of 8.61 MMT.
Stronger financial markets and a notable uptick in the global risk sentiment on optimism of US-China Trade deal along with likely production deficit in next season are the main reason for the current ongoing rally.
The market touched thirteen-month high before on Friday but gave back some gains later after it was announced that US-China has agreed on the text of phase one of the trade deal. Financial markets and other market pared gains as details of the deal were not available.
The latest CFTC data for the week ending 10th December showed that managed money traders continued to reduce their short position. This week they reduced their net short position by 80,076 contracts to 15,439 contracts. Whereas trade added 69,277 contracts to their previous week's net short position to 1,83,187 contracts.
This was the seventh consecutive week when markets have closed up. Technically market is extremely overbought and at 13.5cents/lb there is a high possibility that exports from India will increase considerably. Further short covering from speculators is almost complete. These factors may lead to a correction in the market in coming weeks.
Support for the Sugar No. 11 March lies at 13 cents /lb and resistance at 13.70 cents/lb.
(Commoditiescontrol Bureau)
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