Mumbai, 5 Aug (Commoditiescontrol): Raw sugar futures experienced a notable decline over the past week, with prices falling 1.7% as the market reacted to the potential for increased sugar exports from India due to an improving outlook for the country's cane crop. The October raw sugar contract dropped by 0.4 cents, or 2.2%, on Friday, settling at 18.10 cents per pound. This marked a retreat from the recent high of 19.32 cents reached on Thursday. Similarly, the October white sugar contract in London decreased by $7.70, or 1.5%, to $515.80 per metric ton.
The market's downward movement was largely influenced by reports of higher-than-average monsoon rainfall in India, which is expected to enhance cane crop yields and potentially lead to increased sugar stockpiles. India, one of the world’s largest sugar producers, is anticipated to benefit from above-average monsoon rainfall in August and September due to the La Niña weather pattern. As of July 28, the Indian Meteorological Department reported that the country had received 430.2 mm of rain during the current monsoon season, 3% above the long-term average. Notably, July’s rainfall exceeded the average by 9%, with the monsoon covering the entire country ahead of schedule.
Despite the favorable weather conditions, discussions about potential sugar export approvals in India remain ongoing. Although speculation persists that India may permit sugar exports, no official decision has been made yet, even as pressure mounts from sugar millers. Meanwhile, concerns linger due to a forecasted 2% year-on-year decline in India’s sugar production for the 2024/25 season, with output expected to total 33.31 million metric tons, according to the Indian Sugar and Bio-energy Manufacturers Association (ISMA).
While the improved crop outlook in India weighed on global sugar prices, the market found some support from diminished production prospects in Centre-South Brazil, where dry conditions are forecasted to persist. However, analysts suggest that the impact on Brazil’s production may already be priced into the current market levels.
Global demand for sugar remains robust, with Brazil, the world’s top sugar exporter, shipping 50% more sugar in the first half of the year. Despite this strong demand, speculators have increased their bearish positions, adding 35,151 lots to their net short position in raw sugar, according to the Commodity Futures Trading Commission (CFTC).
Looking ahead, market participants are keeping a close watch on key support and resistance levels for the October contracts, identified at 17.84/17.59 cents and 18.51/18.93 cents, respectively. The market is likely to remain sensitive to developments in India, particularly any official announcements regarding sugar exports, as well as weather patterns in Brazil and other key producing regions. As the market navigates these factors, volatility is expected to continue, with traders closely monitoring both supply and demand dynamics in the weeks ahead.
(By Commoditiescontrol Bureau: 09820130172)
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