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ICE Raw Sugar Stumbles Lower On Demand Concerns Amid Dwindling Supplies

26 Feb 2020 7:24 am
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Mumbai (Commodities Control) – Raw sugar prices on ICE declined on Tuesday as concerns over gains were limited by continuing fears over the rapid spread of the new coronavirus, even as dwindling supplies remained a focus for traders.

March raw sugar fell 0.12 cents, or 1.1%, to settle at 15.15 cents per lb and May raw sugar settles flat at 14.74 cents. May white sugar fell $2.10, or 0.5%, to $412.70 a tonne.

"The market is in the grip of macro developments and the coronavirus epidemic seems set to continue to have an effect," Sucden Financial said in a note. "Growth forecasts worldwide are being downgraded and basket trading is taking hold."

Meanwhile, U.S. Centers for Disease Control and Prevention said Americans should begin to prepare for the new coronavirus to spread after reports this week of new cases in several more countries.

Sugar prices dwindled on Tuesday due to weakness in crude prices after crude oil fell 2.6% to a 2-week low. Lower crude prices are negative for ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.

However Sugar end-users are growing increasingly concerned by a widening deficit this season, with production falling in main producers such as Thailand and India.

Tuesday’s support on the lower end came on a report of reduced sugar output from Thailand, the world's fourth-biggest sugar producer. Thailand's Office of the Cane and Sugar Board on Tuesday reported that Thailand's sugar production from Dec 1-Feb 23 was down by 8.1% y/y at 7.9 MMT.

Fitch Solutions has cut its forecast for Thai sugar production in 2019/20 to 9.8 million tonnes from 13.5 million tonnes.

India looks likely to churn out 26.5 million tonnes in 2019/20 compared with a previous forecast of 26 million tonnes, the Indian Sugar Mills Association said. India produced 33.2 million tonnes in 2018/19.

Dealers said funds still have plenty of capacity to buy more sugar, having only marginally increased net longs.

Four Russian sugar plants will not operate in the 2020/21 season, the country's union of sugar producers said on Tuesday, because of domestic oversupply and low prices.

Support and Resistance for Sugar #11 lies at 14.53 cents and 15.03 cents, respectively.

(Commodities Control Bureau)

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