Mumbai, 10 Sep (Commoditiescontrol): Sugar prices future continues to stay on firm footing as supply fears persists. The sweetener is being driven by concern over dimming supply prospects in India, one of the world's top producers, traders said. In a latest output fall forecast, the Thai Sugar Millers Corp projected Thailand's 2023/24 sugar production to fall by 18% on year to 9 MMT due to a severe drought.
However, on Friday, the natural sweetener prices eased on profit taking after climbing to a 12-year high on Tuesday. ICE sugar futures for October delivery settled 0.37 cents, or 1.4% lower at 26.31 cents per lb after hitting a more than a four-month high of 27.10. The contract gained 1.9% in the week. October London white sugar lost $6.50, or 0.9%, at $726.80 a tonne, marginally lower over previous week.
Drier than normal weather threatened to curtail production in India, Thailand and forecast for a global sugar deficit lent a support to both ICE raw sugar and London white sugar futures.
Sugar prices in India have jumped by more than 3% in a fortnight to their highest in six years, traders and industry officials said, driven higher by production concerns raised by limited rainfall in the country's main growing regions.
India is forecast to receive lowest monsoon rains in eight years, but latest update suggest a late pick-up in monsoon, especially in the growing region, such as Maharashtra, Karnataka and others.
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 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.
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.
French sugar and ethanol maker Tereos on Tuesday said it has raised the price to be paid to farmers for the 2022 sugar beet harvest to an average of 43.10 euros ($46.26) per metric ton to reflect a rise in sugar prices.
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 Brazilian 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.
Citi said its commodities team "remains bullish on ICE sugar in the short-to-medium term," due to the weather issues in Asia. Sugar complex prospect remained underpinned by concern over crops in India and Thailand as dry weather threatens to curb output. However, Brazilian mills are expected to process more sugarcane benefiting from mostly dry and hot weather for the next 15 days. That should keep a lid on price rise.
For Monday, support for the October Sugar contract is at 25.91 cents and 25.52 cents, with resistance at 26.90 cents and 27.50 cents.
(By Commoditiescontrol Bureau: 09820130172)
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