Mumbai, 12 Feb (Commoditiescontrol): Sugar prices have maintained uptrend albeit at slower pace led by bargain buying amid supply worries. For the week ended Feb 8th, raw sugar prices edged marginally higher while white sugar prices turned lower.
ICE raw sugar prices edged up on Friday, as estimates of lower sugar cane crushing in Brazil is seen applying pressure on already strained global supplies.
Sugar found support after consulting firm Safras & Mercado cut its 2024/25 Brazil Center-South sugar cane crush estimate to 650 MMT from a previous forecast of 670 MMT, citing drier-than-normal conditions.
ICE sugar futures for March delivery settled up 0.04 or 0.17% at 24.02 cents per lb. The contract added another 0.5% to its fourth straight weekly winning streak.
March London white sugar contract fell 0.03% of $0.20 at $665.30 a ton. The contract lost 0.70% this week.
Sugar complex benefited from the supportive fundamentals. Adverse weather conditions in the growing regions such as Thailand raised global supply concerns. The strong undertone helped stem the selling pressure from weaker Brazilian Real weighed on sugar futures. The real dropped to a 3-month low against the dollar Monday, encouraging export selling by Brazil's sugar producers.
Recently, short covering in sugar futures emerged after Thai Sugar Millers Corp cut the high end of its Thailand 2023/24 sugar production estimate to 7 MMT to 7.5 MMT from a November estimate of 7 MMT to 8 MMT.
The global sugar deficit is expected to widen to 788,000 tons in the 2024/25 year, meaning supplies will remain tight and prices are likely to stay high, analyst Green Pool said on Tuesday in its initial forecast for the crop year.
Interestingly, StoneX raised its 2023/24 global sugar surplus estimate to 3.4 MMT from a previous estimate of 730,000 MT due to increased sugar output in Brazil.
India said on Friday that it has allowed mills to convert 1.7 million metric tons of sugar for ethanol production but there were no plans to divert more sugar.
Meanwhile, Indian Sugar Mills Association (ISMA) reported that India's 2023/24 sugar output during the Oct -Jan 31 period fell 3.2% on year to 18.7 MMT.
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. Also, the update from sector trackers made unpleasant read. Ukraine's 2023 white beet sugar output jumped to 1.8 million metric tons from around 1 million in 2022, the agriculture ministry said on Thursday, after farmers increased the area sown to sugar beet.
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.
Trading Commission (CFTC) data on showed speculators have added 6,255 contracts to their net long position in raw sugar to 7,156 lots.
Weather concerns is the latest addition to sugar equation which remains lopsided, in favour of ample supplies. Several industry reports including Unica, have pegged a sharp rise in Brazilian sugar production. That should help cut global deficit prospect. However, the drought conditions in growing region such as Thailand remains a concern. Traders have started changing their bearish views recently. Meanwhile, analysts are forced to readjust their production estimates and availability of the sweetener. Overall, the bullish price pattern remains unaltered though funds have decided to increase their short position. A clarity on production is necessary before taking a fresh bet.
For Monday, support for the March Sugar contract is at 23.78 cents and 23.54 cents, with resistance at 24.34 cents and 24.66 cents.
(By Commoditiescontrol Bureau: 09820130172)
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