Mumbai, 16 May (Commoditiescontrol): Sugar futures on the Intercontinental Exchange (ICE) eased on Wednesday, as strong pace of production in Centre-South Brazil helped ally supply fear. However, weakening of U.S. dollar keep check on sugar price decline. The July delivery of raw sugar fell 0.22 cents, or 1.2%, to close at 18.65 cents per lb. On Tuesday, the contract slumped to 18-month low of 18.31 cents.
In London, the August ICE white sugar contract also fell, losing $10.70 or 1.9%, to close at $542.30 per metric ton, near its lowest point in over a year.
Ramped up Brazil's sugar production was a focal point for traders. Unica reported Wednesday that Brazil's sugar production in the second half of April jumped 84.0% on year to 1,843 MMT, and for the 2024/25 marketing year (Apr-Mar) sugar production rose 65.9% on year to 2.558 MMT. Brazil's sugar mills have boosted their cane crushing for sugar at the expense of ethanol production as they crushed 46.96% of sugarcane this year for sugar, up from 41.42% of cane used last year.
Unica's report confirmed Datagro's estimate. The agency 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 18.45 cents and 18.24 cents, with resistance levels expected at 18.91 cents and 19.16 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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