Mumbai, 23 DEC (Commoditiescontrol): Sugar prices continued to maintain firm posture during the week to Dec 23rd, largely aided by supply concerns amid rising demand for the sweetener. Christamas celebration across the globe faced a challange from chilly weather conditions in North America, but the could hardly dampen the sentiments.
However, the weather conditions turned out favourable for prices as production forecast for many region was subdued. Global sugar availability stood at tightest level ever. Situation further worsened by storm that crossed the U.S. in the past several days caused a frost event for the Loisiana sugarcane crop.
ICE raw sugar futures rose on Friday to a fresh near six-year peak on expectations of tight near-term supplies. The ICE March raw sugar rose 0.09 cent, or 0.43%, at 20.98 cents per lb, after touching its highest since Feb. 9, 2017 at 21.03 cents. March London white sugar settled up $0.80, or 0.14%, at $572.10 a tonne.
Reduced sugar production across the globe, from India to Thailand, Argentia, the U.S. and Eurpe are the major supportive factor for prices, as that ma force European sugar and food manufacturers to import sugar, further adding pressure to already tight global supplies.
Dealers said the trend is pointing upwards as physical traders are getting twitchy about global production while speculative funds have a strong buying appetite.
A survey by S&P Global Commodity Insights estimated Brazil mills have produced around 360,000 tonnes of sugar in the first half of December. Industry group Unica should release production data early next week.
Concerns over supply tightness was reflected in increasing the premium for front month March over May which climbed to about 1.45 cents a lb on Thursday, up from around 1.38 cents at the close on Wednesday.
Delays to harvests in Thailand, Australia and Central America have helped to tighten supplies while rains have also meant some cane in Brazil will not be cut until next season.
Also boosting sugar, the dollar fell while oil bounced as optimism over the Chinese economy outweighed concern over a global recession.
In India, the world's No. 2 sugar exporter, 8.2 million tonnes of sugar have been produced since the start of the season on Oct. 1, against 7.8 million tonnes in the same period last year, data showed.
Sugar saw support from the outlook for smaller sugar production from Thailand and India. StoneX Financial said last Wednesday that due to a delay in Thailand's sugar harvest, projections for Thai sugar exports of 1 MMT to 2 MMT this quarter "will not materialize."
Also, India's Sugar Mills Association (ISMA) said Wednesday it sees India's sugar mills diverting 4.5 MMT to 5.0 MMT of sugar to ethanol production in 2022/23.
A supportive factor for sugar is smaller sugar production in Europe, which may force European sugar and food manufacturers to import sugar, leading to tighter global supplies. The European Association of Sugar Manufacturers last Thursday forecasted that EU 2022/23 sugar output would fall 7% on year to 15.5 MMT.
Sugar prices fell back from their best levels Monday after the India Sugar Mills Association (ISMA) reported that India's Oct-Dec 15 sugar production rose 5.4% on year to 8.21 MMT.
A negative factor for sugar was last Thursday's comments from India's Food Secretary, who said his country would consider allowing additional sugar exports in January. India is the world's second-largest sugar exporter.
Increased sugar output in Brazil is bearish for sugar prices after Unica reported last Monday that Brazil's Center-South sugar output in the 2022/23 marketing year through November rose 2.8% on year to 32.940 MMT.
Higher sugar output in India is bearish for prices. On Oct 24, the ISMA forecasted that India's 2022/23 sugar production (Oct 1-Sep 30) would climb 2% on year to 36.5 MMT as Indian farmers boosted their planted cane acreage by 5.4% on year to 5.6 mln hectares.
In 2021/22, India's sugar production rose 2.9% on year to 35.8 MMT. Also, robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped 57% on year to a record 11 MMT.
In a bearish factor, the International Sugar Organization (ISO) on Nov 22 projected that global 2022/23 sugar production would climb 5.5% on year to a record high of 182.1 MMT. Also, ISO projected that the 2022/23 global sugar market would be in a surplus of 6.2 MMT.
Speculators have raised their bullish bets in raw sugar futures, data from the Commodity Futures Trading Commission (CFTC) showed on Friday. Funds raised their long position in ra sugar to 163,423 lots after a large addition of 36,014 contracts in a week.
For Tuesday, support for March sugar contract is at 20.80 cents and 20.62 cents with resistance at 21.17 cents and 21.36 cents.
Given the undrlying fundamentals and the built up of specultive interest, the sweetener seems on course to end the year 2022 on a positive note. Some firework looks instore for the commodity to thrust higher.
(By Commoditiescontrol Bureau: 9820130172)
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