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ICE Raw Sugar Slips On Weaker Global Consumption Estimates; Analysts Sees Surplus In 2020-21

28 Mar 2020 9:09 am
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Mumbai (Commodities Control) – ICE raw sugar prices fell on Friday as renewed economic growth fears caused by the coronavirus pandemic outweighed stimulus efforts by global policymakers, though white sugar continued to rise.

May raw sugar ​​settled down 23 cents, or 2%, at 11.10 cents per lb. May white sugar ​​settled up 30 cents, or 0.1%, at $350.70 a tonne, having closed up 3.4% on Thursday. London sugar managed to touch 2-week high on concern about supply disruptions in India.

A 6% plunge in WTI crude oil prices on Friday also undercut sugar prices. While, weakness in the Brazilian real on Friday was bearish for sugar as the real fell 0.96% against the dollar and was only modestly above last Wednesday's record low of 5.2523 reals/USD.

However white sugar prices have more positives by it side. Indian Sugar Exim Corp said on Friday that India will miss its sugar export target this year of 5 MMT since the coronavirus pandemic is causing a shortage of labor at ports and sugar mills. Several ports and terminals in India have declared force majeure due to shutdowns from the coronavirus pandemic.

The Indian Sugar Mills Association (ISMA) on Wednesday said that India's cane crushing may be affected during the 3-week long lockdown imposed by the Indian government to slow the spread of the coronavirus.

Meanwhile, Analyst Green Pool said it now expects a global sugar surplus in the 2020/21 season as the coronavirus pandemic dents demand growth and the oil price war encourages a switch to more production of the sweetener in Brazil.

Rabobank estimates global 2020/21 sugar surplus of 0.6 MMT compared with a 6.7 MMT sugar deficit for 2019/20. Rabobank projects that India's 2020/21 sugar production will climb 15.9% y/y to 33.5 MMT and that EU 2020/21 sugar output will climb 4.0% y/y to 18.3 MMT.

Sugar trader Czarnikow said it has reduced its EU sugar consumption estimate by 700,000 tonnes, or 4%, for the rest of 19/20 due to the coronavirus outbreak. Its EU production deficit has been lowered to 400,000 tonnes.

Support ad Resistance for Sugar #2 lies at 10.81 cents and 11.59 cents/lb respectively.

(Commodities Control Bureau)

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