MUMBAI (Commodities control) - Raw sugar prices on the Intercontinental Exchange were in consolidation mode after touching a year high last week. It managed to close with marginal gains. Global production deficit outlook next season supported the price while producers selling kept check on price gains.
The most tracked, Sugar no 11 or the March raw sugar settled up 4 points at 13.54 cents per lb, having touched one year high of 13.67 cents/lb last week. While March London white sugar settled up $ 3 at $358.5 per tonne.
Prices witnessed some correction on Monday as markets were heavily over bought. At higher levels, producer selling was witnessed.
But the market got support from strong financial market and recovery in Brazilian Real from recent lows and the flow of positive news on the demand-supply front throughout the week.
On Wednesday, there came news from the Indian Sugar Mills Association (ISMA) that India's sugar production during Oct 1-Dec 15 fell 35% YoY to 4.58 MMT. ISMA on Nov 5 projected that India 2019/20 sugar production will fall 19% YoY to 26.85 MMT.
Conab on Thursday cut its Brazil 2019/20 sugar production estimate by 5.3% to 30.1 MMT from an Aug estimate of 31.8 MMT.
On Friday, Unica reported that Brazil Center-South sugar production in the first half of December plunged 92.4% YoY to 33,000 MT versus 432,000 MT in the same period last year.
The latest CFTC data showed that managed money traders shifted their net short position to a net long position. They bought net 31605 contracts during the week thereby shifting their net short position of 15349 contracts to 16166 contracts. Trade continued to add to their net short position during the week they added 23405 contracts to their net short position to 206592 contracts.
Open interest was down by 38342 contracts to 1169175 contracts.
Markets are consolidating after witnessing a sharp rise in the last few weeks. Further up move from this level will depend on selling pressure from producing countries like India and Thailand.
Despite lower production in India next season India has a huge carry overstock from last year. At around 13.5-14 cents it becomes viable for India to sell in the export market. If there is aggressive selling from Indian mills it will be difficult for prices to move up from the current level.
Experts have a “cautiously optimistic” call-in sugar. Analysts are of the view that, front-month world market raw sugar prices will stay in the range of US$ 13.20 C/LB and at about US$ 14 C/LB.
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