Mumbai (Commodities Control) – Extending the southward movement for the second straight week, NY sugar ended 29 points or 1.71% lower for the week ended 21st May. The most active ICE raw sugar went past 17.35 cents per lb during the week, but shed 69 points from the peak by the end of the week. Sugar #5 settled $6.20/T or 1.37% lower for the week ended 21st May. Most-active August delivery went past $461/Tonne in the initial part of the week.
Long liquidation pressure, weak crude oil and broad-based correction in commodities weighed on the sweetener this week.
Last week, NY Sugar dropped over 3% or 53 points, as the most active ICE July contract settled in red on Friday; just below 17 cents per lb.
In the latest week, ICE raw sugar futures closed more than 2 percent lower on Friday, as speculators liquidated part of their large long position amid a stronger dollar. August white sugar settled down $6.00, or 1.3 percent, at $447.40 a tonne.
On Friday, NY July raw sugar settled down 0.37 cent, or 2.2 percent, at 16.67 cents per lb, hitting a one-month low of 16.60 cents during the session.
Dealers said speculators, who hold a large long position in the sweetener, liquidated contracts as the U.S. dollar gained strength. Macroeconomic indicators were generally negative for commodities on Friday.
ICE raw sugar managed money net long position scaled lower from last week by 20,790 contracts to 238,931 contracts in the latest week to May 18, CFTC data showed. The decline in the net longs were the result of decline in long position by 16,781 contracts and addition to the short position by 4,009 contracts. The open interest was reported at 12, 21, 161 contracts vs 12,37,304 contracts in the past week.
The announcement from India of a cut on export subsidies is unlikely to have any serious impact on the season's exports, dealers said, as it is widely thought Indian traders had contracted to sell over 5.5 million tonnes of the 6 million tonne export target before the subsidy cut.
It can be summed up that increased Indian sugar output, pandemic-affected domestic consumption and prospects of higher exports from the country kept a lid on price gains for the sweetener.
"The current pandemic outbreak has impacted domestic sugar demand (in India)," analyst Green Pool said in a note, adding India's sugar consumption was set to fall for the second year in a row in the 2020/21 season.
The Indian Sugar Mills Association reported earlier in the week that India's sugar output during Oct 1-May 15 rose 14% y/y to 30.36 MMT from 26.53 MMT a year earlier due to a bumper crop and increased cane crushing.
Having said so, Sugar prices still have support from concerns about smaller global sugar output. Suedezucker AG, the EU's top sugar producer, said on Thursday that it expects EU 2021/22 sugar production to fall 4.0% y/y to 14.5 MMT.
On Tuesday, Conab forecast that Brazil 2021/22 sugar production will fall 5.7% y/y to 38.9 MMT. Conab also cut its Brazil 2020/21 sugar production estimate to 41.3 MMT from a Dec forecast of 41.8 MMT.
Brazil's cane industry group Unica is expected to release production data next week.
Support and resistance for Sugar #11 lies at 16.09 and 17.35 cents per lb, respectively.
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