Mumbai Commodities Control - For the week-ended 12th march, NY Raw Sugar May’21 contract settled at 16.13 cents with a loss of 27 points or 1.65%.On the other hand there was a relatively lesser fall in London white Sugar which fell by $4 or 0.86% to close at $459.50/MT.
This was the third straight week that ICE raw sugar registered a weekly loss. The forecast of the sugar market turning to surplus and weak Brazilian Real were the main reasons for the continued fall.However, prices are likely to get support near term due to supply bottleneck from Brazil and strong crude oil prices.
Unica reported early in the week that Brazil's Center-South sugar production from Oct through Feb was up 44% y/y to 38.235 MMT. The percentage of cane used for sugar rose to 46.19% in 2020/21 from 34.46% in 2019/20. Also, researcher Datagro on Wednesday projected that the global sugar market in 2021/22 would shift to a surplus of 1.1 MMT after a 2.6 MMT deficit in 2020/21.
Sugar prices have underlying support from concern about the possibility of reduced sugar exports from Brazil. Brazil reported Feb 22 that current shipping delays for its soybean exports might curb global sugar supplies because the queue of vessels waiting at Brazilian ports is so large that bottlenecks will likely continue until May when sugar is normally the biggest crop for export.
From India, the news was mixed. On one hand ISMA reported higher production; negative for the global sugar market but at the same time it reported lower export commitments by Indian sugar mills, a positive for global sugar markets.
India's Sugar Mills Association reported that India's Oct-Feb sugar production rose 20% y/y to 23.38 MMT. The India Sugar Trade Association on Feb 11 forecast that 2020/21 India sugar production will increase 9% y/y to 29.9 MMT.
The Indian Sugar Mills Association (ISMA) said Feb 18 that India's sugar mills have only contracted 2.5 MMT of sugar exports this year, below the government's export target of 6 MMT on a shortage of shipping containers. Also, the All India Sugar Trade Association has projected India's 2020/21 sugar exports may only total 4.3 MMT, down 25% from 2019/20.
In the short term, downside appears to be limited in sugar prices as the market is likely to get some support after three consecutive weeks, primarily supported by slower export from India and supply bottleneck in Brazil along with strong crude oil prices. Recovery in Brazilian Real could be the trigger for recovery in sugar prices.
For the week ended 9th March however, net longs have dropped, for the second straight week, by 13,670 contracts to 194,068 contracts. Net longs amid simultaneous drop in the long position and addition to the short side. The open interest was registered at 12,05,721 contracts vs 11,87,494 contracts last week.
Experts note that in the upcoming week/s, an uptrend will start as soon as the market rises above resistance level 16.70 cents , which will be followed by moving up to resistance level 18 cents. However, the downtrend will extend while the market is trading below resistance level 16.70 cents, which will be followed by reaching support level 15.95 and 15 cents per lb.
For the moment, support and resistance for Sugar #11 lies at 15.80 cents and 16.49 cents/lb respectively.
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