Mumbai, 26 July (Commoditiescontrol) Sugar prices in the global market are likely to remain firm this week amid positive sentiments cropped up due to low output estimates and firm crude prices which have bounced back on robust demand.
ICE raw sugar futures finished higher last week as Unica said the frost impact on Brazil's sugar-cane crop would be "big." Companies were still assessing the damage from the first frost in late June before this week's frost again hit Brazil's sugar crops. Unica said the frost this week reached a broader area, with more severity in some regions.This resulted in some short covering by trade which helped price to move up.
The most active October contract closed with gain of 46 points at 18.17 cents per lb. The March contract settled higher by 49 points at 18.59 cents per lb last trading session on Friday.On the other hand London white sugar most active October contract closed with loss of $5.50/Mt to close at $457.5/MT.Spread between September white sugar and September refined sugar was at $57.12/MT
Dealers said the frosts could affect next season's crop, though crop damage in cane takes time to assess and will depend on the adequacy of rains going forward.
As per the CFTC weekly report, ICE raw sugar managed money was 200,869 contracts net long on 20th July; down 1,978 contracts from the previous week. Long side positions decreased by 5,136 contracts, while short side positions witnessed a fall of 3,158 contracts. Trade reduced their short position by 10,363 contracts . The open interest for the week was registered at 1,075,686 vs 1,077,341 contracts last week.
Bullish Factors
On Tuesday, Wilmar International cut its Brazil 2021/22 Center-South cane output estimate to 510 MMT from April's forecast of 530 MMT, which would be the lowest sugar output in 10 years. Wilmar also warned that Brazil's 2022/23 sugar cane crop might not recover due to this year's drought and frosts from this month that damaged cane plants.
As per dealers on balance, shrinking Brazilian output should more than offset worries over the rapid spread of the Delta coronavirus variant, boosting sugar prices.
According to the International Sugar Organization (ISO), World sugar production in 2020/21 (Oct/Sep) will fall -0.2 percent y/y to 169.2 MMT after falling -8.4 percent in 2019/20 to 169.6 MMT. The world sugar deficit in 2020/21 will widen to a -3.1 MMT deficit from a +900,000 MT surplus in 2019/20.
Bearish Factors
Above 18cents lb Indian supply is likely to increase which will keep cap on sugar price prices
According to India's Sugar Mills Association, sugar production in India will climb +13 percent y/y to 31 MMT in 2020/21 due to a good monsoon season.
Subdued demand for white sugar.
If Indian supply increases, the huge long liquidation by managed money which will pull down prices, said a trade analyst.
Sugar prices are likely to remain strong this week due to crop damage concern in Brazil and rebound in crude oil prices.But decreasing spread between refined sugar and raw sugar is indicating slow demand for white sugar which will keep raw sugar price in check further above 18 cents/lb Indian supply is likely to rise which will cap up side. Immediate support and resistance for Sugar #11 lies at 17.40 and 18.66 cents per lb, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
0 Comments 
Post Comment 
