Mumbai, 3 Sep (Commoditiescontrol): Sugar continues to enjoy the sweet spot it entered since the weather related issue in growing regions, particularly in India, Thailand, etc have taken a centre stage. Adding further pressure to fundamental factors was talks of supply tightness due Amid supply concern, the ICE Raw Sugar prices ended firm on Friday.
ICE sugar futures for October delivery settled up 0.75 cents, or 3%, at 25.81 cents per lb. The contract ended nearly 4% higher for the week.
October London white sugar added $12.80, or 1.8%, at $728.00 a tonne, edging up towards a 12-year high of $740.20 set earlier this week. It has advanced 2.6% during the just concluded week.
Sugar complex prospects remained underpinned by concern over crops in India and Thailand as dry weather threatens to curb output.
India is forecast to receive lowest monsoon rains in eight years, but the latest update suggests a late pick-up in monsoon, especially in the growing region, such as Maharashtra, Karnataka and others.
India's Jun-Aug monsoon rain was -10% below normal, and in August, India received only 162.7 mm of rain, the least since at least 1901, raising concerns about weaker crop output and the potential for sugar export restrictions.
Sugar has also benefited by the growing speculation of India imposing restrictions on sugar exports. According to the Reuters report last Wednesday, India is likely to impose a ban on sugar mills from exporting sugar in the 2023/24 season beginning in October as a lack of monsoon rain reduced the country's sugar crop.
As per India's weather bureau, the state of Maharashtra, which accounts for 37% of India's sugar output, has received as much as 20% less rain than normal since the start of the season. India's food ministry said it will make a final decision about sugar exports for 2023/24 when actual estimates of total production are available.
India allowed mills to export only 6.1 MMT of sugar during the current 2022/23 season to September 30 after letting them export a record 11.1 MMT last season.
Meanwhile, the USDA, in its bi-annual report released on May 25, projected that global 2023/24 sugar production would climb 6.0% on year to a record 187.881 MMT and that global 2023/24 human sugar consumption would increase 2.3% on year to a record 180.045 MMT.
The USDA forecast 15.2% on year decline in 2023/24 global sugar ending stocks to a 13-year low of 33.455 MMT. This is much sharper to the International Sugar Organization (ISO), August 10 projection. The global trade body maintained that 2023/24 global sugar production would fall 1.2% on year to 174.8 MMT and expects the global sugar market in 2023/24 to fall into a deficit of 2.12 MMT from a 2022/23 global sugar surplus of 852,000 MT.
Apart from India's sugar export ban talks, if it does it will be halting shipments for the first time in seven years, there were concerns about the production in Thailand as well. The South-East nation experienced below-average rains which resulted in reduced sugarcane development.
On the other hand, the production in the key Centre-South region of Brazil is running well above last season's pace with agricultural yields seen up 24% in July.
The El Nino climate pattern remains the main factor as it could further disrupt production in Asia or the harvest progress in Brazil, traders said.
A survey issued by S&P Global Commodity Insights put sugar production in the key Centre-South region of Brazil during the first half of August at 3.54 million metric tons, up 34.4% from the same period a year earlier.
Lack of demand from China remains a bearish influence on the market. China imported 110,000 metric tons of sugar in July, down 60.5% from the same month last year.
Earlier on Thursday, a private research firm Conab raised its Brazil 2023/24 sugar production estimate to 40.9 MMT from an April forecast of 38.8 MMT as favorable weather conditions boosted sugarcane yields.
Production prospects are not as good elsewhere and analysts are expecting a global deficit. They bet near-record output from top producer Brazil will not be enough to offset falling production elsewhere.
Speculators increased their bullish bets in futures of raw sugar on ICE U.S. in the week to Aug 29, data from the Commodity Futures Trading Commission showed on
Friday. Funds added 31,035 contracts from their net long position in raw sugar, taking it to 216,547 lots in the period.
For Monday, support for the October Sugar contract is at 25.28 cents and 24.76 cents, with resistance at 26.10 cents and 26.40 cents.
(By Commoditiescontrol Bureau: 09820130172)
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