Mumbai, 26 Dec (Commoditiescontrol): Sugar has made it a habit of posting weekly losses, off late. The natural sweetener extended its falling streak for the seven straight weeks in a row, overwhelmed by bearish factors, including the improved global supply conditions.
Though, the commodity attempted to cut some losses on Friday, but that couldn't prevent it from sliding near nine-month low. Short-covering triggered by multi-month low helped ICE raw sugar prices to end the session firm. Prices of the natural sweetener recently declined due to soaring output from top producer Brazil and reduced weather concerns.
ICE sugar futures for March delivery settled 0.38 cent, or 1.9% higher at 20.62 cents per lb, after sliding to its weakest since early March on Thursday. For the week, the contract dropped 6.23%. March London white sugar rose $3.50, or 0.6%, to $590.20 a ton. Shedding 5.83% on a weekly basis.
Dealers said the market looked like it wanted to see what lay below 20 cents short term, especially as top producer Brazil's output soared and weather concerns take a backseat, for now. A correction upward was expected after the sharp fall in a short period of time, they added.
French sugar major TereosTEREO.UL said its sugar output in Brazil grew 19% in the 2023/2024 harvest, along with better-than-expected sugarcane crushing.
In recent times, the natural sweetener is overwhelmed by bearish factors, including improved global supply conditions. Recently, UNICA reported the 35% increase in Brazil's Centre-South region sugar output in late November. India, the world's second-largest sugar maker, is likely to produce 32.5 million tons of sugar in the 2023/24 marketing year that began on Oct. 1, an industry body said.
Adding further pressure is rainfall returning to top producer Brazil over the next week. Also, the lack of follow-through buying after last week's falls means technical signals have turned bearish.
Dealers said concerns over dry conditions in Brazil, which could negatively impact the development of next year's crop, were taking a backseat with rains forecast for the next week.
Brazil's output is heading for a new record which means the market is no longer expected to record a deficit in 2023/24, they said.
Egypt's sugar reserves are sufficient for 5.2 months, the country's state news agency said.
Meanwhile, India's sugar output this crop year, hit by weak rains, is set to lag consumption for the first time in seven years, according to traders and a survey of farmers.
Green Pool Commodity Specialists said that India restricting sugarcane use for ethanol could add 2 MMT of sugar to domestic supplies. Indian mills produced 10.7% less sugar between Oct. 1 and Dec. 15 compared with a year ago, a leading trade body said.
Conab raised its 2023/24 Brazil sugar production estimate to 46.9 MMT from an August estimate of 40.9 MMT. As a result, the markets ended the previous week lower.
Sugar prices have been on the decline, retreating from a 12-year high recorded last month, on increased supplies from Brazil. Brazil exported 3.68 million metric tons of sugar in November, 10% up year-on-year.
The International Sugar Organization (ISO) bearish outlook too impacted prices. The global sugar body has raised its 2023/24 global sugar production (Oct-Sep) estimate to 179.9 MMT from a previous estimate of 174.8 MMT and cut its 2023/24 global sugar deficit to 335,000 MT from a prior forecast of 2.1 MMT.
Longer term, however, sugar is due an upward correction, dealers said, as the market is still expected to record a deficit this season.
Speculators reduced their bullish bets on futures of raw sugar on ICE U.S. significantly in the week to Dec. 19, according to Commodity Futures Trading Commission (CFTC) data on Friday. Speculators cut 17,206 lots off their long position in raw sugar and were holding a net long position of only 9,867 contracts.
The latest Unica report suggest a pacy growth in Brazilian output that helped cut global deficit prospect. Though, drought conditions in the growing region such as Thailand remains a big challenge, which has incidentally forced analysts to readjust their production estimates and the availability of the sweetener during the busy season. Conversely, ample supplies from Brazil and India, should help ease supply constraint. Overall, the bullish price pattern remains unaltered though funds have decided to cut their long position. A clarity on production in necessary before taking a fresh bet.
For Tuesday, support for the March Sugar contract is at 20.21 cents and 19.79 cents, with resistance at 21.06 cents and 21.49 cents.
(By Commoditiescontrol Bureau: 09820130172)
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