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ICE Raw Sugar Plunges To 1 ˝ Yr Low On Demand Worries, Higher Production Estimates

2 Apr 2020 8:45 am
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Mumbai (Commodities Control) – Raw sugar prices on ICE fell to the lowest levels in 1-1/2 years, with both the May and July hitting contract lows on Wednesday on fears the coronavirus pandemic will knock demand and bets that plunging energy prices will prompt Brazil's cane mills to produce sugar at the expense of ethanol.

May raw sugar ​​settled down 38 cents, or 3.6%, at 10.04 cents per lb​​, its lowest since late September 2018.

As per experts, sugar is facing the 'double whammy' of expected lower global demand and higher production from Brazil hammering chances of another deficit in 2020/21.

Crude oil fell close to 18-year low, which is bearish for ethanol prices and may encourage Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.

Also weighing on sugar is ongoing weakness in the Brazilian Real, which tempts exporters in Brazil to sell dollar-priced sugar as it raises their returns in local currency terms. The Real dropped 1.02% Wednesday against the dollar and posted a new record low of 5.2736 reals/USD.

May white sugar ​​settled down $11.10, or 3.1%, at $342.00 a tonne, though losses were limited as the coronavirus lockdown in India and beyond is disrupting exports and supply chains, prompting consumer stockpiling.

Support and Resistance for sugar #11 lies at 9.76 cents and 10.56 cents per lb, respectively.

(Commodities Control Bureau)


       
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