Mumbai, 11 Nov (Commoditiescontrol): Last week, raw sugar futures faced moderate losses, weighed down by a stronger U.S. dollar and forecasts of favorable rainfall in Brazil’s Center-South, the nation’s main sugar-producing area.
March raw sugar futures on ICE fell 0.38 cents, or 1.71%, to 21.82 cents per pound, while December white sugar futures in London dropped by $6.30, or 1.12%, to close at $556.60 per metric ton. Early in the week, raw and white sugar prices reached their lowest levels in two weeks and 1.5 months, respectively, following improved weather predictions.
Rainfall expected in Brazil’s Center-South region, projected by Climatempo, has eased concerns over earlier drought conditions, supporting the region's sugarcane crop health. However, while the rainfall is a positive for crop yields, the market reacted negatively, anticipating higher supplies. Additional pressure came from long liquidation in the London sugar market, where funds reached a record high of 44,261 net-long positions as of November 5, the largest since 2011, according to the Commitment of Traders (COT) report.
Brazil's supply data added to the bearish sentiment, with Unica reporting an 8% annual increase in sugar output in the Center-South region for early October, reaching 2.443 million metric tons (MMT). Overall, cumulative production for the 2024/25 season rose by 1.9% to 35.591 MMT. Further supply pressures loom as India’s sugar mills recently sought approval to export 2 MMT of surplus sugar, potentially increasing global stocks.
However, some limitations in Brazil’s production remain due to recent adverse weather impacts. Fires from extreme heat and drought in São Paulo affected up to 80,000 hectares of sugarcane. Green Pool Commodity Specialists estimate a 5 MMT reduction in sugarcane output due to these fires. Brazil’s crop forecasting agency, Conab, has lowered its 2024/25 sugar production estimate for the Center-South region to 42 MMT, with other analysts, including Rabobank and Datagro, also revising forecasts downwards in response to drought and limited milling capacity.
Meanwhile, in India, the outlook for the upcoming sugar crop is optimistic, following a monsoon season with above-average rainfall. As of September 30, the Indian Meteorological Department recorded 934.8 mm of rainfall, the highest in four years and 7.6% above the long-term average. Additionally, recent changes in ethanol production policies may influence India’s export volumes in the near future.
On the technical front, ICE raw sugar futures find support at 21.60 and 21.39 cents per pound, with resistance levels at 22.18 and 22.55 cents. Analysts note that Brazil's production mix, currently at 48.7%, could play a crucial role in supply and price trends in the weeks ahead, as markets closely monitor further developments in both Brazil and India’s production levels.
(By Commoditiescontrol Bureau: 09820130172)
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