Mumbai (Commodities Control) - In a one-sided northward rally, NY sugar settled over 5% or 75 points for the week ended 9th April. This is the sweetener’s first weekly gain in seven. This week, the most active ICE futures ended at 15.46 cents per lb. Meanwhile Sugar #5 active May futures ended at $422.50; up 0.60% for the week.
NY Sugar most-active contract shed over 2.5% or 38 points for the holiday-shortened week, ending 1st April. May futures settled for the week at 14.71 cents per lb; touching lows of 14.66 cents and highest point of 15.30 cents.
Global sugar prices on Friday settled mixed, with NY sugar at a 2-week high. NY sugar had support on strength in foreign demand for Brazil's ethanol supplies.
May raw sugar settled up 0.28 cents, or 1.8%, at 15.46 cents per lb, having hit a nearly 3-week high at 15.72 cents/lb. May white sugar settled down $2.20, or 0.5%, at $422.50 a tonne, with weak demand curbing rest in taking delivery when the contract expires next week.
It is to be noted that despite a positive weekly settlement, ICE raw sugar witnessed sixth consecutive fall in the managed money net longs.
For the week-ended 6th April, NY Sugar continues to crumble under the pressure of fading net longs. The speculative strength faded as the net longs in the managed money dropped by 3,251 contracts from the previous week. According to the CFTC report for the latest week, the longs fell by 3,404 contracts to 203,825 contracts, and the short side dropped by 152 contracts to 41,875. The open interest was registered at 12,05,946 contracts vs 12,10,526 contracts in the last week.
Through the week, ICE raw sugar prices were cushioned by news of fresh demand, weather concerns in Brazil, strength in other commodities and strong crude oil. Short covering helped when NY Sugar tanked to 3-months lows in the prior week.
Exports out of Brazil may also be slowed by congestion as sugar competes with soybeans for available capacity at ports. This week, Archer Consulting cut its estimate for Brazil's center-south sugar output to 35 million tonnes.
Dealers said the market was underpinned by adverse weather in several countries, including France, where freezing temperatures had caused severe damage to newly planted sugar beet.
Meanwhile, Brazil's Trade Ministry reported Thursday that Brazil's Jan-Mar ethanol exports rose 82% y/y to 548 mln liters, the highest in 5 years for this period. The stronger demand may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus reducing sugar supplies.
Dealers said the market was continuing to regain ground after finding solid support around a three-month low of 14.67 cents set in late March. Sugar rose despite heavy rolling by funds out of the May contract, they added.
Although, Sugar prices continue to be undercut by concern the resurgence of the pandemic will keep pandemic restrictions in place that crimp fuel demand and encourage Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.
Brazil on Thursday reported a record 4,249 deaths from Covid, and India reported a record 132,000 new Covid infections. Also, the U.S. reported 79,661 new Covid infections on Thursday, the most in 7 weeks, and Japanese Prime Minister Suga said on Friday that the government is reimposing pandemic restrictions in Tokyo, Kyoto, and Okinawa for four weeks due to the recent surge in Covid infections.
Having said so, the market's main focus continues to be in the start of the harvest in top producer Brazil.
The USDA on Friday kept most projections for the U.S. sugar sector unchanged from a month earlier, including the key stocks-to-use ratio, seen at 15.1%.
Support and resistance for Sugar #11 lies at 14.97 and 15.97 cents per lb, respectively.
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