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Weekly: ICE raw sugar futures scaled lower amid stronger dollar, year-end profit taking

2 Jan 2022 8:51 pm
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Mumbai (Commoditiescontrol): ICE raw sugar futures scaled lower this week amid stronger dollar, year-end profit taking.

The most active March raw sugar contract settled lower by 0.36 cents at 18.88 cents per lb, while the March white sugar contract settled lower $6.2 at $ 497.10 last trading session on Friday.

Raw sugar prices ended up 21.9 percent on the year. White sugar prices posted an annual gain of 18.1 percent.

Dealers said the market had been boosted this year by declining stocks with a global deficit in the 2020/21 season (October/September) generally expected to be followed by another deficit in the current 2021/22 season.

The weekly commitment of trader’s report from the Commodity Futures Trading Commission (CFTC) will be delayed until Monday, January 3rd.

Bullish Factors

Higher crude oil prices support ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.

Sugar prices saw support from reduced sugar production in Brazil after Unica reported on Dec 16 that sugar production in the second half of November in the Center-South region fell 62.8 percent y/y to 160,000 MT.

In addition, the sugar content in the sugarcane crushed fell 8.7 percent y/y to 133.72 kg/ton from 146.38 kg/ton a year earlier.

Sugar has underlying support from the recent damage to Brazil's sugar crops from frost and drought.

Conab, on Nov 23, cut its Brazil 2021/22 sugar production estimate to 33.9 MMT from an Aug forecast of 36.9 MMT, down 17.9 percent y/y.

The International Sugar Organization (ISO) recently projected a global 2021/22 sugar deficit of -2.55 MMT.

Bearish Factors

The Indian Sugar Mills Association (ISMA) said India currently has an opening balance of +8.18 MMT of sugar as of Oct 1 and needs to export about 6 MMT in 2021/22, although that would be 15 percent y/y less than 7.1 MMT in 2020/21.

As per the India Sugar Mills Association, sugar production from India, the world's second-largest sugar producer, will climb +13 percent y/y to 31 MMT in 2020/21 due to a good monsoon season.

A negative factor for sugar is the outlook for higher Thailand sugar exports after Czarnikow projected Thailand 2021/22 sugar exports would surge +67 percent y/y to 6.7 MMT.

On Sep 8, the Thailand Sugar Millers Corp forecast Thailand 2021/22 sugar production could climb 44 percent y/y to 11 MMT due to beneficial rain and increased plantings. Thailand is the world's second-largest sugar exporter.

According to the International Sugar Organization (ISO), World sugar production in 2021/22 (Oct/Sep) will climb +0.08 percent y/y to 170.47 MMT from 170.335 MMT in 2020/21.

Technically market is likely to find support at current levels near Dec low and 200 days moving average which is18.46 and 18.48 respectively.
Immediate support and resistance for Sugar #11 lies at 18.64 and 19.10 cents per lb, respectively.

(By Commoditiescontrol Bureau: +91-22-40015505)

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