Mumbai, 25 Nov (Commoditiescontrol): Sugar prices experienced a subdued week, ending lower as global supply dynamics and currency fluctuations weighed on market sentiment.
ICE March raw sugar futures declined by 0.09%, settling at 21.36 cents per pound on Friday, while London December white sugar futures edged down by $0.20 to $553.60 per metric ton. These declines marked the conclusion of a week shaped by bearish signals and fluctuating global indicators.
The downturn followed the International Sugar Organization's (ISO) updated projections, which revealed a reduced global sugar deficit forecast for 2024/25 and an increased surplus estimate for 2023/24. These adjustments added downward pressure to prices, overshadowing earlier gains linked to crude oil’s two-week high. Rising oil prices typically encourage mills to prioritize ethanol production over sugar, limiting sugar supply, but the weakening Brazilian real countered this effect by incentivizing higher sugar exports, further pressuring global markets.
Supply-side dynamics were equally mixed. In Brazil, heavy rainfall forced the premature closure of over 100 sugar mills, compared to the usual 38, suggesting potential short-term reductions in output. However, global supply prospects remain strong, with Thailand projecting an 18% increase in production for the 2024/25 season, reaching 10.35 million metric tons. Additionally, India’s sugarcane harvest has benefited from the highest monsoon rainfall in four years, contributing to global surplus expectations.
Economic factors added to the bearish outlook. Weak earnings from major producers like France’s Tereos, which reported an 18% drop in first-half net profits due to declining sugar and sweetener prices, underscored challenges in the sector. Meanwhile, the U.S. dollar’s strength, hitting a one-year high, made sugar more expensive for international buyers, curbing demand.
On the speculative front, data from the Commodity Futures Trading Commission (CFTC) revealed that traders reduced their net short positions in raw sugar by 2,355 lots to 29,676, signaling caution in the market.
Looking ahead, analysts identify key support levels for ICE raw sugar futures at 21.21 and 21.06 cents per pound, with resistance likely at 21.56 and 21.76 cents. Future price movements will hinge on weather developments in Brazil and updated production forecasts. While global supply pressure persists, short-term disruptions and potential shifts in ethanol demand could influence market recovery in the coming weeks.
(By Commoditiescontrol Bureau: 09820130172)
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