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Weekly: ICE raw sugar futures unchanged battling supply & demand factor

13 May 2024 8:51 am
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Mumbai, 13 May (Commoditiescontrol): The recent battled between bulls and bears to dominate sugar trade is nearing its culmination with niether bears nor bulls emerging as as winner and both losing their strength. For the week ended May 10th, the prices of ICE sugar was almost stagnant.

ICE raw sugar futures ended lower on Friday, as strong dollar and robust Brazilian sugar output prospect applied pressure. Further, the carry-over pressure from Datagro continued to weigh on investor sentiment. Datagro raised its sugar production estimate for Brazil's Center-South region while weakness in the Brazilian real encourages export selling from Brazil's sugar producers. The real fell to a 1-week low against the dollar. The consultancy firm hiked its 2024 Center-South sugar production estimate to 41.6 MMT from a March estimate of 40.45 MMT.

ICE sugar futures for July delivery settled down 0.28 cents or 1.43% at 19.30 cents per lb. It barely moved on a weekly basis (0.1%) after having lost 7.1% in the previous week. August London ICE white sugar contract lost $6.30 or 1.09% at $569.30 a metric ton.

Dealers said the market was stuck between solid support around 19 cents and resistance at 20 cents, noting prices had held in that band for the last couple of weeks. They said the dry and hot weather in Brazil will likely boost production numbers in the early part of the crop.

Sugar production in Brazil's Centre-South region is forecast to total 42.3 million tons in 2024/25, StoneX said on Tuesday. Output in 2023/24 has been estimated by industry group UNICA at 42.4 million.

A survey by S&P Global Commodity Insights indicates Brazil's Centre-South cane crush late in April to have been 54% up, while sugar production was expected to rise 73%.

The global sugar market is heading to a small surplus of 1.62 million metric tons in the 2024/25 season (Oct-Sept), after posting a deficit of 1.79 million tons in 2023/24, as production in Thailand recovers, according to Datagro.

Meanwhile, on Monday, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces had posted record-high temperatures this month, with new highs beating records as far back as 1958.

The Indian Sugar and Bioenergy Manufacturers Association reported Monday that India's 2023/24 sugar production from Oct-Apr fell 1.6% on year to 31.4 MMT as more sugar mills closed for the year and ended their sugarcane crush. As of Apr 30th, 516 Indian sugar mills had closed operations compared with 460 mills that closed at the same time last year.

Citi maintained its forecast for another deficit in 2024/25 and for raw sugar futures to trade in the range of 22-25 cents per pound next quarter. "The international sugar market does not seem to have adequately priced in risks of crop downgrades for the 2024/25 CS Brazil season," Citi said in a note.

In recent times, Sugar prices drifted lower, hit by ideas of better supplies from Asia and Brazil, but dealers said the fall attracted some bargain buying on Thursday.

Elsewhere, Vietnam's Office of the Cane and Sugar Board reported that Thailand's 2023/24 sugar production from Dec-Mar was 8.75 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT.

Ukraine is likely to have used up its proposed 2024 sugar export quota from the European Union by next month and could have to cut the area sown with sugar beet by up to 20% unless it finds other markets, a top official said on Thursday.

Commodity Futures Trading Commission (CFTC) data on showed speculators have increased their net short position in raw sugar by 9,659 lots to 37,684 lots.

We continue to hold our earlier view of price uncertainty as the sugar complex continue tosuffer from a double whammy, which is improved supplies, due to favourable weather conditions in the growing region, and falling global demand. Weather factor has also emerged a key factor in driving prices lately. 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 once again altered their price view to bearish. Analysts are forced to readjust their production estimates and availability of the sweetener.

For Monday, support for the Jul Sugar contract is at 19.16 cents and 19.03 cents, with resistance at 19.52 cents and 19.75 cents.

(By Commoditiescontrol Bureau: 09820130172)

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