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Weekly: ICE raw sugar futures post third straight week of gains gain on reduced Brazil's 2024/25 sugar crop expectation

5 Feb 2024 8:59 am
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Mumbai, 5 Feb (Commoditiescontrol): Sugar prices have once again managed carved out gains during the week ended Feb 2nd even as growing sugar output in Brazil continue to be a major hurdle. In fact, the central American country is predicted to witness drop in sugar crop in the current marketing year.

ICE raw sugar prices gained on Friday, on prospect of reduced Brazilian 2024/25 sugar crop prospect. The sluggish outlook helped natural sweetener to close the week moderately higher while overcome negative influence of slide in crude oil prices and jump in Ukraine white beet sugar output.

ICE sugar futures for March delivery settled up 0.33 cent, or 1.4%, at 23.89 cents per lb. The contract rose only 0.5% in the week. That was third straight week of rise for the commodity.

March London white sugar contract rose 1.3% of $8.50 at $660.70 a ton. The contract lost 1.10% this week.

India said on Friday that it has allowed mills to convert 1.7 million metric tons of sugar for ethanol production but there were no plans to divert more sugar.

Sugar prices shook off early losses and settled moderately higher. Concern that dry conditions in Brazil will curb its 2024/25 sugar production that begins in April is boosting prices.

StoneX lowered its Brazil 2024/25 Center-South sugarcane production estimate to 622.1 MMT from a previous estimate of 628.8 MMT, citing below-average rains from November to January that curbed the development of sugarcane crops.

Meanwhile, Indian Sugar Mills Association (ISMA) reported that India's 2023/24 sugar output during the Oct -Jan 31 period fell 3.2% on year to 18.7 MMT.

In recent times, the natural sweetener is overwhelmed by bearish factors, including improved global supply conditions. Major exporters Brazil and Thailand are witnessing strong production. Also, the update from sector trackers made unpleasant read. Ukraine's 2023 white beet sugar output jumped to 1.8 million metric tons from around 1 million in 2022, the agriculture ministry said on Thursday, after farmers increased the area sown to sugar beet.

Last Thursday, Unica reported Brazil's Center-South sugar output jumped 148.6% on year in the first half of January to 48,000 MT. Further, the sugar output in the 2023/24 crop year through mid-January rose 25.5% on year to 42.099 MMT.

Meanwhile, more sugarcane is being crushed for sugar than ethanol, as 49% of cane was crushed in the 2023/24 crop year through mid-January for sugar production compared to 45.95% last year.

Brazil exported 75% more sugar in December from a year ago, the government said. Thailand is expected to produce 8-8.5 million tonnes of sugar in the 2023/24 production year.

China's sugar output in the 2023/24 season is seen at 3.2 million metric tons, down 60,000 metric tons from a year earlier. Recently, China's National Development and Reform Commission (NDRC) pegged sugar imports in 2023/2024 at 5 million tons, slightly up, while consumption is expected to steady at 15.5 million tons.

The International Sugar Organization (ISO) bearish outlook too impacted prices. The global sugar body has raised its 2023/24 global sugar production (Oct-Sep) estimate to 179.9 MMT from a previous estimate of 174.8 MMT and cut its 2023/24 global sugar deficit to 335,000 MT from a prior forecast of 2.1 MMT.

Trading Commission (CFTC) data on Friday showed speculators have reduced their short position by cutting 8,382 lots to their net short position and now hold a net short of 2,227 contracts in the sweetener.

Although, the markets are building on lower Brazilian sugar crop report, but the fact remains that several industry reports including Unica have suggested a sharp rise in Brazilian sugar production. That should help cut global deficit prospect. Yet, the drought conditions in growing region such as Thailand remains a concern. Traders have started changing their bearish views recently. Meanwhile, analysts are forced to readjust their production estimates and availability of the sweetener. Overall, the bullish price pattern remains unaltered though funds have decided to increase their short position. A clarity on production is necessary before taking a fresh bet.

For Monday, support for the March Sugar contract is at 23.46 cents and 23.03 cents, with resistance at 24.17 cents and 24.45 cents.

(By Commoditiescontrol Bureau: 09820130172)

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