Mumbai (Commodities Control) – After two consecutive weeks of flat closing, NY Sugar managed to settle 1.5% higher for the truncated week that ended on 24th December. The sweetener on ICE futures hit a two-week high on Thursday, with the dollar choppy as Britain and the European Union clinched a long-awaited trade deal.
NY Sugar ended just 1 point higher for the week ended 18th December and lost a point, as it closed flat, for the week ended 11th December.
Even strength in sugar demand from China, the world's second-largest sugar importer, lifted prices on Thursday after China's General Administrations of Customs reported that China's Nov sugar imports surged 115% y/y to 710,000 MT and Jan-Nov China sugar imports rose 37.3% y/y to 4.36 MMT.
ICE raw sugar set a positive tone for the week that began 22nd December, the prices on Monday settled moderately higher on the outlook for increased sugar consumption from Indonesia, Southeast Asia's largest economy. The Indonesia Sugar Refiners Association on Monday said that it expects Indonesia to boost its sugar exports next year by 10% y/y to 3.3 MMT due to higher demand from the food and beverage industry.
Having said so, the week continued to be overshadowed by looming concerns about the coronavirus pandemic's impact on demand. Also the holiday-sentiment resulted in a generally thin trade across the markets.Gains in sugar were limited by weakness in crude oil prices. Crude prices fell by more than 1% Tuesday.
By mid-week, sugar managed to concentrate on the positive news as investor risk appetite grew on expectations of an imminent post-Brexit trade deal between Britain and the European Union. This weakened dollar, making dollar-denominated commodities like sugar inexpensive for non-U.S investors.
In the final trading session before the Christmas break, March raw sugar settled up 0.5% at 14.90 cents per lb, having hit its highest in two weeks earlier in the session. March white sugar rose 0.3% to settle at $408.6 a tonne.
News that Britain had agreed a trade deal with the European Union boosting risk appetite in the wider financial markets, where investors were at the same time betting on a global economic recovery next year.
Dealers said sugar was also benefiting from talk that India was struggling to export the sweetener because of a global shortage of shipping containers, and from news that Indonesia, a top sugar importer, has issued import licences.
The CFTC data for the week will be released on 28th December, on account of Federal holiday on 25th December. Until Last week, the net longs continued to slide for the fourth week in a row. For the week ended 15th December, net longs gave up 16,816 contracts to 198,423 contracts. This was the result of simultaneous drop on the long side and rise on the short side. The open interest fell to 12,04, 634 contracts.
Meanwhile dealers believe that analysts are likely to be revising down their expectations for sugar consumption next year given the ongoing chaos caused by the coronavirus pandemic.
India will be unable to count on Iran, one of its most important sugar customers, for its upcoming export drive as an increase in Iranian production and Tehran's shortage of rupees limit buying.
Adding to the bearish side is the outlook for more sugar supplies from India. The Indian Sugar Mills Association reported on Thursday that India's sugar production from Oct 1-Dec 15 jumped 61% y/y to 7.38 MMT.
Market sees sugar ranging between 14.20 and 15 cents in the near term, with no new fundamental factors to drive it.
Anton Kolhanov of Kolhanov.com sees an uptrend starting as soon as the market rises above resistance level 15.20 cents, which will then be followed by a resistance level 16.50 and 18 cents.
Support and resistance for Sugar #11 lies at 14.76 cents and 15.02 cents per lb, respectively.
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