Mumbai, 11 Mar (Commoditiescontrol): Sugar prices continued their downward spiral for the fourth week in a row, as robust prospect for Brazil sugar cane as well as European sugar bear and improved weather condition helped tame supply concern, alongside poor global demand applied pressure. That's bearish for natural sweetener which is currently undergoing correction in prices after having reached highest level over a decade last month.
ICE raw sugar prices dropped on Friday, falling for second straight session in a row, as forecast for rain in Brazil boosted production prospect for the world's largest sugar exporter.
Forecaster Maxar Technologies said that moderate rain is expected in Brazil's sugar-growing regions over the next five days, which fueled long liquidation in sugar futures. Also, weakness in the Brazilian real weighed on sugar after the real on Friday fell to a 1-week low against the dollar. The weaker real encourages export selling from Brazil's sugar producers.
ICE sugar futures for May delivery fell 0.13 cents or 0.60% at 21.15 cents per lb. Prices are down 3.8% for the week ended March 8th. Last week, the contract hit its lowest since mid-January at 22.71.
May London white sugar contract lost $6.60 or 1.09% at $597.50 a metric ton. The contract ended 0.85% lower for the week.
The natural sweetener suffered a loss in the previous session after the European Union area planted with sugar beet seen growing 2-3% next season, helped tame global deficit outlook.
France's largest sugar producer Tereos said, the EU's area under sugar beet plantation is growing meagerly, despite good sugar prices.
On Tuesday, BP Bunge Bioenergia projected that the global sugar deficit would widen to 1.6 MMT in 2024/25 as Brazil's sugar production in 2024/25 falls by about 4.4% to 40.8 MMT due to dry conditions that curb sugar cane yields. Earlier in the day, sugar prices initially dropped to 2-month lows on rising sugar production in Brazil, the world's largest sugar producer.
Dealers said an improving outlook for sugar production in major exporter Thailand was among the factors that had been weighing on prices, but they also cited a mostly negative outlook for Brazil.
Consultancy Datagro expects Brazil's Centre-South sugar production to fall nearly 5% in the new season.
Sugar cane planting in the western Indian states of Maharashtra and Karnataka is expected to fall for the 2024/25 season starting Oct.1, an industry body said on Wednesday.
Dubai's Al Khaleej Sugar aims to increase production at its sugar refinery this year, with competition from India curtailed by bad weather in the South Asian country, its managing director said.
The global sugar deficit is expected to widen to 788,000 tons in the 2024/25 year, meaning supplies will remain tight and prices are likely to stay high, analyst Green Pool said on Tuesday in its initial forecast for the crop year.
European Union lawmakers granted Ukrainian food producers tariff-free access to EU markets for another year.
Ukraine sugar production is seen rising to a seven-year high in the upcoming 2024/25 season, an executive with a major Ukrainian agricultural company said.
Top producer Brazil exported 3.02 million metric tons of sugar in February, three times the volume seen in the same month a year earlier.
Commodity Futures Trading Commission (CFTC) data on showed speculators have added 17,391 contracts to their net long position in raw sugar to 21,950 lots.
We have been mentioning in our reports about weather condition in the sugar cane growing region as a key challenge. It seems that aspect is changing favourable for sugar cane plantation. But, that is proving negative for prices. Overall impact of improved weather condition is: rise in output and hence, the availability of sugar. Several industry reports including Unica, have pegged a sharp rise in Brazilian sugar production. That should help cut global deficit prospect. However, 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 May Sugar contract is at 20.97 cents and 20.80 cents, with resistance at 21.36 cents and 21.58 cents.
(By Commoditiescontrol Bureau: 09820130172)
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