Mumbai (Commoditiescontrol): ICE raw sugar futures edged higher to touch three and half year higher. Signs of damage to Brazil's sugar crops from frost and drought have fuelled fund buying of sugar futures this week.
NY raw sugar#11 most active December contract closed with a gain of 129 points at 19.94 cents per lb or 6.7%. London White sugar#5 most active October contract was up $31.1/Mt to close the week at $508.8/MT.
CS Brazil Cane Crushing:
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Cane crushing continued to remain lower in CS Brazil and is likely to continue in coming months as well which is likely to keep overall Sugar production lower in the region. Most of the major players in the industry have reduced cane crushing. Cane crushing was estimated at 520 MMT for the current season as against cane crush of 605 MMT of last year.
Cane crush for the second half of July was reported at 46.7 MMT, lower by 8.2% and Sugar production was lower by 11.9% at 3.03 MMT on decline in ATR content despite of higher cane diversion towards Sugar.
Hydrous ethanol production continued to remain lower as revenue from hydrous was lower by 1.3 c/lb than Sugar during the last fortnight which weighed on the diversion of cane towards ethanol.
Cumulative cane crush was reported lower by 7.4% and Sugar production by 8.1% at 18.2 MMT. However, anhydrous ethanol production was higher by 25.7% on higher revenue from anhydrous. As difference between anhydrous and Sugar has narrowed drastically during the last 10-15 days the diversion to anhydrous is expected to come down in coming months.
On the other hand white premium continued to fall near 26 months and bounced back during last two trading sessions and is expected to recover in coming days. Demand concern in EU and parts of US due to COVID surge amidst expiring contract dragged the overall spread to much lower levels during the recent week. White premium is currently trading at 51.3 USD per MT and is expected to recover in coming days.
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As per the CFTC weekly report, ICE raw sugar managed money was 264,821 contracts net long on 10th August; up 17,248 contracts from the previous week. Long side positions increased by 14,211 contracts, while short side positions witnessed a fall of 3,037 contracts. Trade increased their long side position by 8,970 contracts and short increased by 22,193 contracts. The open interest for the week was registered at 1,212,493 vs 1,161,551 contracts last week.
As per the CFTC weekly report, ICE raw sugar managed money was 264,821 contracts net long on 10th August; up 17,248 contracts from the previous week. Long side positions increased by 14,211 contracts, while short side positions witnessed a fall of 3,037 contracts. Trade increased their long side position by 8,970 contracts and short increased by 22,193 contracts. The open interest for the week was registered at 1,212,493 vs 1,161,551 contracts last week.
Sugar has an upside bias given the production outlook in Brazil and funds continue to build their long position, but the upside is limited given the narrowing price difference between sugar and ethanol and lower demand for sugar in the physical market which is indicated by falling white premiums. Apart from these factors, high freight will also restrict the physical demand.
Immediate support and resistance for Sugar #11 lies at 19.29 and 20.43 cents per lb, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
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