MUMBAI (Commoditiescontrol) – Sugar prices on the Intercontinental Exchange ended slightly up at the fag end of last week after swinging in volatile trade as rising fuel prices offset the weak Brazilian real and higher supply expectations.
The most tracked, Sugar no 11 or the July contract inched up 0.5% to 12.98 cents, while the London August white sugar ended up 0.4% to $338.70 a tonne. Volumes in the July sugar no 11 contract jumped to 123,478 on Thursday compared with 92,787 a week ago. Volumes in the Sugar no 5 slipped to 5,821 compared with 6,993 a week ago.
Sugar started the week with a one-week low led by a fall in crude oil prices. However, by the end of the week the benchmark contract had risen to a one-month high led by a rise in crude oil prices along with high ethanol prices in Brazil. Friday, the July contract touched an intra-day high of 13.01 cents, levels last seen on March 19, 2018.
Showers in the month of April in Brazil’s centre-south region has pushed up hydrous ethanol prices to a record high of $604.21 per cubic meter in the first 11 days of April. Prices of ethanol have been on the rise as the showers have delayed harvesting and cane crushing.
With crude oil prices too on the rise, traders expect Brazilian millers to allocate around 60% of their crushes for ethanol. The WTI May Brent crude prices have risen 1.6% since April 1 to $64.07 a barrel.
Wednesday, consultant Canaplan pegged Brazil’s center-south mills sugar production allocation at 38% in 2019-20 compared with 35.2% in 2018-19.
During the week, the Indian Meteorological Department’s “near-normal” monsoon forecast this season extended some bearish bias. The IMD has predicted Indian monsoons between June to September to be at 96% of the 50-year average of 89 cm, raising hopes of better output in the Indian sub-continent.
The position roll-over from May to July also led to some weakness in prices. Meanwhile, the Brazilian real continued to extend its weakness, slipping to a three-week against the US dollar to 3.95 amid uncertainty over pension reforms. A weaker real leads millers in Brazil to produce more sugar to take advantage of the lucrative exchange rate.
Prices also fell after the European Commission on Wednesday forecast European Union white sugar production in 2019-20 at 18.3 million tonnes, which is a 3.9% rise from 17.6 million tonnes estimated for 2018-19.
According to the CFTC data, managed money traders added 6977 and 4591 lots to their long and short position respectively thereby taking their net short position to 44,478 lots as on the week ended April 16. Open interest for the week stood at 990,825 down 59,595 on the week.
If the weather turns drier this week, it could provide a window for harvesting and crushing, leading to some bearishness in prices. The support for the July contract is seen at 12.66 cents for the near-term.
(By Commoditiescontrol Bureau)
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