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ICE Raw Sugar Ends Higher On U.S. Sugar Beet Crop Concerns

22 Feb 2020 8:12 am
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Mumbai (Commodities Control) - Sugar prices pushed higher Friday on U.S. sugar beet crop concerns after the American Sugar beet Growers Association said adverse weather may delay U.S. 2020/21 sugar beet plantings. The U.S. 2019/20 beet crop fell 9.3% y/y to a 9-year low of 8.158 MMT.

May Sugar #11 on Friday closed up 18 points or 1.2% higher at 15.12 cents/lb, while March raw sugar contract ended up 19 points or 1.23% at 15.59 cents/lb. May London white sugar ended up $3.20 or 0.88%. For the week sugar #11, March contract, gained 2.84%, while May raw sugar contract upped 2.3% over the week.

Sugar futures rallied sharply over the past month to a 2-3/4 year high last Wednesday on concern about future global supplies. Thailand's Office of the Cane and Sugar Board reported Wednesday that Thailand's sugar production from Dec 1 through Feb 15 was 7.4 MMT, down 14.0% y/y.

A drought in Thailand, the world's fourth-biggest sugar producer, is slashing the country's sugar output. The Thailand Meteorological Department said this year's drought in Thailand is the worst in 40 years. The Thai Sugar Millers Corp said Feb 7 that Thailand's 2019/20 sugar production might drop 35% y/y to 9 MMT from 14 MMT in 2018/19 as dry conditions reduce sugarcane yields.

Sugar prices also found support on Tuesday's report by the India Sugar Trade Association (ISMA) that sugar production in India, the world's second-largest sugar producer, dropped sharply by 23% y/y to 16.99 MMT during Oct 1-Feb 15.

In additional bullish news, Green Pool Commodity Researchers last Monday raised its global 2020/21 sugar deficit estimate to 3.8 MMT from a previous forecast of 1.0 MMT. Also, sugar supplies from the EU are on the decline after the European Commission reported Feb 3 that EU sugar exports during Oct 1-Jan 22 fell -62% YoY to a 3-year low of 291,000 MT.

A negative for sugar prices is weakness in the Brazilian real which fell to a new record low Friday of 4.4051 Reals/USD. A weaker real encourages export selling by Brazil's sugar producers.

UNICA last Wednesday reported that Brazil's 2019/20 Center-South sugar production Oct-Jan rose +0.48% y/y to 26.485 MMT with the percentage of sugar cane crushed for sugar falling to 34.50% from 35.44% last year and the percentage of cane crushed for ethanol production rising to 65.50% from 64.56% last year.

Support and Resistance for Sugar #11 lies at 14.77 cents and 15.33 cents/lb, respectively.

(Commodities Control Bureau)


       
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