Mumbai, 15 May (Commoditiescontrol): Sugar futures on the Intercontinental Exchange (ICE) experienced a notable increase on Tuesday, driven by a weakening U.S. dollar and bullish production forecasts from Brazil. The July delivery of raw sugar climbed 0.24 cents, or 1.29%, to close at 18.87 cents per lb, rebounding from an 18-month low of 18.31 cents reached earlier in the session.
The surge was largely attributed to short covering triggered by the dollar index touching a one-week low. In London, the August ICE white sugar contract also gained, rising $3.00 or 0.50%, to close at $553.00 per metric ton, recovering from its lowest point in over a year.
Brazil's sugar production was a focal point for traders. Datagro revised its 2024 production forecast for the Center-South region of Brazil upward to 41.6 million metric tons (MMT) from an earlier estimate of 40.45 MMT. This update significantly influenced market sentiment, despite the strong production pace in the region which has been pressuring prices.
Further attention is on the forthcoming production data from UNICA, which is expected to show a substantial year-on-year increase of about 50% for the latter half of April. StoneX and S&P Global Commodity Insights have also projected a significant uptick in Brazil's sugar output, estimating the 2024/25 production at 42.3 million tons.
Globally, the sugar market is witnessing changes in production dynamics. Datagro forecasts a modest global surplus of 1.62 million metric tons for the 2024/25 season, marking a shift from the previous season’s deficit. This is due to recovering production in Thailand and increased output forecasts from China.
In India, however, the Indian Sugar and Bioenergy Manufacturers Association reported a slight 1.6% decrease in sugar production year-over-year as of April 30, adding a layer of complexity to the global supply outlook.
With these developments, market players are closely watching for potential shifts in trading strategies. Technical support for the July sugar contract is currently seen at 18.47 cents and 18.07 cents, with resistance levels expected at 19.11 cents and 19.35 cents. Traders and analysts are keenly awaiting UNICA's upcoming report, which could further influence market directions.
(By Commoditiescontrol Bureau: 09820130172)
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