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ICE Raw Sugar Retreats As Brazilian Real Tumbles To Record Low

21 Feb 2020 8:04 am
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Mumbai (Commodities Control) – Weakness in the Brazilian real on Thursday weighed on sugar prices as the real fell 0.54% against the dollar and posted a new record low of 4.3969 Reals/USD. A weaker real encourages export selling by Brazil's sugar producers.

March raw sugar settled down 18 cent, or 1.2%, at 15.40 cents per lb, having hit a 2-1/2 year high of 15.90 cents last week. Sugar #11 May contract ended down 14 cents or 0.93% at 14.94 cents.

May white sugar settled down $2.3, or 0.55%, at $419.7 per tonne.

Sugar remains underpinned by widening deficit forecasts for this season, with recent concerns centred around Thailand, a top exporter.

However, sugar price rises have made the sweetener more lucrative than ethanol, dealers said, and this could prompt cane mills in Brazil to produce more sugar later this year.

Both ethanol and sugar are made from cane. The harvest in Brazil, a top producer, begins in April.

The recent weakness of Brazil's real has provided further incentive to sell sugar on the export market where it is priced in dollars.

"The weakness in the real will encourage further pricing by Brazilian millers, but we believe this is concentrated further down the (curve). We expect the May (sugar) to eventually threaten 16.00 cents," said Sucden Financial in a report.

Support and Resistance for sugar #11 lies at 14.73 cents and 15.75 cents/lb respectively.

(Commodities Control Bureau)

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