Mumbai, 1 Jan (Commoditiescontrol): Sugar has extended its recent spate of price decline even on the last week of 2023. Although, the natural sweetener recorded moderate losses, but it rounded off the year higher. It was a back to back year of gains.
The natural sweetener extended its falling streak for the eight straight weeks in a row, overwhelmed by bearish factors, including the improved global supply conditions.
ICE raw sugar prices ended sharply lower on Friday, the final trading day of 2023, as soaring output from top producer Brazil and reduced weather concerns applied pressure. However, raw sugar prices recorded an annual gain of 3% with poor crops in India and Thailand, which was to a some extent offset by strong production in Centre-South Brazil. White sugar prices gained 7.5% for the year.
Sugar prices on Friday fell sharply and gave up nearly all of Thursday's rally. Year-end position squaring and liquidation from funds pressured sugar prices.
ICE sugar futures for March delivery settled 1.18 cent, or 5.4% lower at 20.58 cents per lb, after sliding to its weakest since early March at 20.03 cents. Extending its recent streak of fall, the contract settled last week of 2023 a tad lower, down 0.18%. Thin trading volume recorded in the spot month as most dealers remained on the sidelines during the holiday period.
March London white sugar contract dropped $26.20, or 4.21%, to $596.20 a ton. The contract lost 1.62% this week.
Dealers said the market was trying to muster support after its recent slide which was driven by the strong pace of production in Centre-South Brazil. Yet, speculators were continuing to liquidate long positions against the backdrop of strong production from Brazil's centre-south region.
Brazil's largest sugar group Raizen said on Wednesday its sugarcane crushing was 14% up from last year so far.
In recent times, the natural sweetener is overwhelmed by bearish factors, including improved global supply conditions. Recently, Brazilian sugar industry group UNICA said output more than tripled in the first half of December as mills tried to extend the crushing season to the limit during drier-than-normal weather and while sugar prices are still relatively high.
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.
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.
Adding pressure is rainfall returning to top producer Brazil. Also, the lack of follow-through buying after last week's falls means technical signals have turned bearish.
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.
Meanwhile, China's sugar output in the 2023/2024 season is estimated to rise 9% from the previous season to 9.8 million metric tons because of a rise in the planting of sugar cane, the state planner said on Wednesday. The nation's sugar imports in 2023/2024 will rise slightly to 5 million tons while consumption is expected to steady at 15.5 million tons, the National Development and Reform Commission (NDRC) said.
Egypt's sugar reserves are sufficient for 5.2 months, the country's state news agency said.
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.
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.
Trading Commission (CFTC) data on Friday showed money managers decreased their net-long London ICE sugar positions to 10,920 for the week ending Dec 26, a 22-month low.
Recent reports on sugar output from various research outfits such as Unica, suggesting a growth in Brazilian production, has helped cut global deficit prospect. However, drought conditions in the growing region such as Thailand remains a big challenge, which incidentally forced analysts to readjust their production estimates and availability of the sweetener.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 19.98 cents and 19.38 cents, with resistance at 21.53 cents and 22.48 cents.
(By Commoditiescontrol Bureau: 09820130172)
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