Mumbai, 19 Aug (Commoditiescontrol): Sugar markets remained under pressure during the week ending August 16th, as uncertainty over production and shifting demand expectations favored bearish sentiment, driving prices lower. Despite a slight recovery on Friday, when October raw sugar futures rose by 0.15 cents, or 0.84%, to settle at 18.03 cents per pound, the market closed the week with a 2.4% loss. Similarly, in London, October white sugar increased by $3.40, or 0.66%, to $516.70 per metric ton on Friday, but still ended the week down 1.8%.
The recent uptick in sugar futures was overshadowed by improving prospects for cane crops in India, thanks to robust monsoon rains. Analysts pointed out that better crop conditions in both India and Thailand are exerting downward pressure on global sugar prices. However, in Brazil's critical Center-South region, yields in the current harvest are declining and are expected to continue dropping in the coming weeks.
BMI analysts emphasized that abundant supplies from Brazil have consistently weighed on global sugar prices. Additionally, improving crop conditions in India have contributed to the market's bearish trend. Favorable weather forecasts and reports from the Indian Sugar and Bio-Energy Manufacturers Association suggest that India will have sufficient stocks to support domestic ethanol production and possibly resume exports, which could further depress global prices.
Meanwhile, Ukraine's 2024 sugar beet harvest is projected to decline to 10 million metric tons, down from around 12 million metric tons in 2023, according to agriculture consultancy APK-Inform, citing state weather forecasters.
Sugar prices have faced significant downward pressure over the past month, with ICE sugar futures hitting a 1-3/4 year low and London sugar prices reaching a 2-1/3 year low last Monday. Unica data revealed that Brazil's Center-South sugar production for the marketing year through July increased by 8% year-on-year, totaling 20.753 million metric tons.
The outlook for sugar prices remains mixed. While a stronger Brazilian real has provided some support, other factors continue to weigh on the market. Optimism about a bumper sugar crop in India, fueled by above-average monsoon rains, is growing. As of August 11, India received 579.7 mm of rainfall this monsoon season, 7% above the long-term average, raising expectations of increased sugar output.
In Brazil, Unica reported that sugar production in the second half of July totaled 3.61 million metric tons, marking a 2.16% decline from the previous year. Additionally, agricultural yields for sugarcane fell by 10%, raising concerns about future output. The potential impact of frosts in Brazil's sugar-producing regions could also affect yields.
Traders are closely watching key support and resistance levels for October contracts, currently set at 17.79/17.55 cents and 18.32/18.61 cents per pound, respectively. The near-term outlook for sugar prices will likely hinge on developments in Brazil's weather conditions and potential policy changes in India. Additionally, potential damage to Thailand's sugarcane crop from record heat and the International Sugar Organization's upward revision of the global sugar deficit estimate for 2023/24 could influence market dynamics.
(By Commoditiescontrol Bureau: 09820130172)
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