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Mumbai (Commodities Control) – NY Sugar most-active contract shed over 2.5% or 38 points for the holiday-shortened week, ending 1st April. May futures settled for the week at 14.71 cents per lb; touching lows of 14.66 cents and highest point of 15.30 cents.
The sweetener witnessed its sixth consecutive fall due to declining managed money net longs and fear of demand concerns amid renewed lockdown restrictions amid extended Pandemic demand concerns. During the week, Sugar #5 lost 3.60%, while ending 0.81% higher at $423.40, on the last trading day of the week.
Last week, Sugar #11 for the most-active ICE raw sugar contract shed 57 points or 3.62%. For the week ended 26th March, Sugar #5 reported losses of $16.30 or 3.60%.
For the week-ended 30th March, NY Sugar continues to crumble under the pressure of fading net longs for the fifth straight week in a row. The speculative strength has fizzled as the net longs in the managed money dropped by 11,741 contracts from the previous week. According to the CFTC report for the latest week, the longs fell by 14,473 contracts to 207,229 contracts, and the short side Slipped by 2,732 contracts to 42,028. The open interest was registered at 12,10,526 contracts vs 12,11,200 contracts in the last week.
ICE Raw sugar futures closed down on Thursday amid rising cases of coronavirus in several countries that put a cloud on ideas of demand recovery this year. Sugar prices were also being undercut by Thursday's news that India's sugar output in Oct-March rose 19% y/y to 27.76 MMT from 23.3 MMT a year earlier due to a bumper crop and increased cane crushing.
The India Sugar Trade Association on Feb 11 forecast that 2020/21 India sugar production will increase 9% y/y to 29.9 MMT. However, in a supportive factor for sugar prices, the Indian Sugar Mills Association (ISMA) said that India's sugar mills had contracted only 4.5-4.6 MMT of sugar exports this year, below the government's export target of 6 MMT due to a shortage of shipping containers.
Also sugar prices were undercut by Thursday's 1.24% sell-off in the Brazilian real against the dollar, which encourages export selling by Brazil's sugar producers.
May raw sugar settled down 0.06 cent, or 0.4%, at 14.71 cents per lb, after setting a three-month low of 14.67 cents on Wednesday.May white sugar settled up $3.40, or 0.8%, at $423.40 a tonne.
"Despite somewhat lower production in Brazil, forecasts expect more sugar to be produced globally in 2021/22: in India, there are many signs ... and the EU and Thailand are expected to see an improvement after the latest poor harvests," said Commerzbank in a note early this week.
The bank added there were also concerns near term about demand given ongoing lockdowns in Europe.
A third Covid wave in Europe has prompted France, Germany, and Italy to widen their pandemic lockdown measures, which will reduce economic growth and commodity demand.
Meanwhile, ethanol prices fell sharply in Brazil's largest consuming market last week as coronavirus lockdowns hurt demand. Falling ethanol prices tend to tempt Brazilian mills to prioritize sugar production at the expense of the cane-based biofuel.
Dealers said sugar price risks were to the downside with easing supply tightness, but added Wednesday's low might hold given uncertainty over the upcoming Brazilian harvest.
"We forecast the global market in an 8.5 million tonne surplus in both 2020/21 and in 2021/22. In 2021/22, production will recover in the EU, Thailand and Russia among others," said Fitch Solutions.
Brazil exported 1.98 million tonnes of sugar in March versus 1.42 million tonnes a year ago, the government said.
Support and resistance for Sugar #11 lies at 14.35 and 15.13 cents per lb, respectively. Sugar#5 is expected to trade in a broad range of $410.50 and $437.20.
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