Mumbai, 30 Jul (Commoditiescontrol): Sugar prices have closed the week to July 28th lower, snapping the winning streak for three consecutive weeks, on reduced supply concerns after robust output of the natural sweetener in the largest exporter Brazil. Also, some monsoon relief in growing regions, particularly India - revived the prospect of sugarcane plantation.
Apparently, on Friday, ICE Raw Sugar prices settled lower, dropping to one-week low. Signs of ramped-up sugar production in Brazil, pushed ICE sugar futures for October delivery 0.51 cents or 2.1% lower at 23.92 cents per lb. On Monday, the contract hit its highest since June 22 at 25.30. However, it has reported a 4.4% loss amid good development for the Brazilian sugar season and fair conditions for India's next crop. London October white sugar fell $8.00, or 1.2%, at $678.50 a ton.
Natural sweetener remains in consolidation phase, trading inside the recent narrow range, due to favourable change in weather conditions amid signs of improved availability.
On Tuesday, Unica reported that Brazil Center-South sugar output in the first half of July rose 8.9% on year to 3.241 MMT and that sugar output in the 2023/24 crop year through mid-July rose 21.9% on year to 15.470 MMT. Also, 48.14% of the crushed sugarcane was used for sugar production this year, an increase from 43.54% last year.
Brazil's favorable weather conditions prompted sugar trader Czarnikow to raise its 2023 Center-South sugar production forecast by 500,000 MT to 38.2 MMT. Earlier, on June 29th, Datagro predicted Brazil's Center-South, the main sugar-growing region, to produce a record 39.1 million tons of sugar in the 2023/24 marketing year that began in April, up 16% on year. However, the strength in the Brazilian real is supportive of sugar prices.
In the European Union region, the EU crop monitor reduced its forecast earlier for the 2023 sugar beet yield to 73.3 tons a hectare from 75.9 tons, due to dry weather. That's negative for production and positive for price.
Recently, the Sugar market was underpinned by concerns that El Nino could curb production in India and Thailand but favourable harvest progress in Brazil was keeping a lid on prices.
El Nino has so far led to patchy rains in key producers India and Thailand but top producer Brazil has been enjoying favorable weather that is expected to lead to strong, if not record, output. The intensity of El Niño could result in a 10 to 15% drop in global sugar production, analysts said.
Meanwhile, the demand appears solid as much of the consuming world is now concerned with the health aspects of artificial sweeteners and emerging economies are doing surprisingly well.
Rally in crude prices proves beneficial for the natural sweetener as it lifts ethanol prices and likely to prompt global sugar mills to divert more cane crushing toward ethanol rather than sugar production, thus limiting sugar supplies.
Speculators increased their bullish bets in futures of raw sugar on ICE U.S. in the week to July 25, data from the Commodity Futures Trading Commission showed on Friday. Funds added 23,741 contracts to their net long position in raw sugar, taking it to 113,055 lots in the period.
We continue to hold a positive view on sugar. This was broadly based on the weather conditions which would determine global sugar output. The forecast suggested global supplies may be stressed from the hot climate, which could ultimately lead to the strengthening of prices. However, for now, the weather conditions are turning favourable for crop. Also, the Brazilian sugar harvest is undercutting the price forecast.
For Monday, support for the July Sugar contract is at 23.72 cents and 23.51 cents, with resistance at 24.28 cents and 24.63 cents.
(By Commoditiescontrol Bureau: 09820130172)
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