Mumbai, 15 Jan (Commoditiescontrol): Sugar maintained its winning streak for 2024 by closing the week to Jan 12th higher, its second consecutive week of gains this year, as supply constains in the growing region dominates trading activity. However, the early signs of fatigue are setting in with the traders raising their short bets. Sugar prices have run-up sharply last year. As the supply pressure eases off, the prices are likely to take a dive.
ICE raw sugar prices settled lower on Friday, as stronger Brazilian sugar output data triggered long liquidation. Thursday, Unica reported Brazil's Center-South sugar output jumped 35.6% on year in the second half of December to 236,000 MT.
However, a supportive factor for sugar was Friday's rally in the Brazilian real to a 2-week high against the dollar, discouraging export selling from Brazil's sugar producers.
Traders resorted to long liquidation in recent times as strong Brazilian sugar output snapped supply fears.
Last week, the National Federation of Cooperative Sugar Factories reported India's sugar production from Oct 1-Dec 31 totaled 11.2 MMT, down 7.6% on year. That observation help keep floor under prices.
ICE sugar futures for March delivery settled down 0.15 cent, or 0.7%, at 21.61 cents per lb. It added 2.4% for the week.
March London white sugar contract slipped 0.8% or $4.70 at $618.20 a ton. The contrace gained 1.8% during the week.
Sugar output from Brazil's top producing region could jump to a record 43.1 million metric tons in 2024/25 despite lower supplies of cane, sugar and ethanol consultancy Datagro said.
U.S. sugar output was revised upwards by the USDA on Friday, as industries reported better results.
Dealers said there was some concern about dry weather in Centre-South Brazil which could lead to crop downgrades although rains are currently forecast for the second half of this month.
They also noted the ongoing crisis in the Red Sea was curbing imports of white sugar into East Africa.
In recent times, the natural sweetener is overwhelmed by bearish factors, including improved global supply conditions. Major exporters Brazil and Thailand are witnessing strong production. Brazil exported 75% more sugar in December from a year ago, the government said. Thailand is expected to produce 8-8.5 million tonnes of sugar in the 2023/24 production year.
China's sugar output in the 2023/24 season is seen at 3.2 million metric tons, down 60,000 metric tons from a year earlier. Recently, China's National Development and Reform Commission (NDRC) pegged sugar imports in 2023/2024 at 5 million tons, slightly up, while consumption is expected to steady at 15.5 million tons.
Meanwhile, Egypt's state grains buyer is seeking 50,000 metric tons of raw cane sugar and/or 50,000 tons of white sugar in a tender. The lowest price offered is estimated at $530 a ton CIF free out for raw sugar. Egypt's sugar reserves are sufficient for 5.2 months, the country's state news agency said.
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.
Elsewhere, 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.
Indonesia has set this year's sugar import quota at 4.77 million tons for industrial use, a trade ministry official said on Thursday, up from a quota of 3.6 million tons in 2023.
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 speculators have boosted by adding 7,274 lots to their net short position in raw sugar to 8,739 contracts.
Recent reports on sugar output from various research outfits such as Unica have suggested a sharp rise in Brazilian production. That helped cut global deficit prospect. Although, drought conditions in the growing region such as Thailand remains a big challenge, but in traders view, it could hardly influence prices now. Hence, they have resorted to raising their short bets. Analysts, on the other hand, are forced 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 is necessary before taking a fresh bet.
For Tuesday, support for the March Sugar contract is at 21.46 cents and 21.32 cents, with resistance at 21.85 cents and 22.10 cents.
(By Commoditiescontrol Bureau: 09820130172)
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