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ICE Raw Sugar Drops to 6 Week Lows on Weaker Demand Concerns

15 Jul 2020 7:49 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE slid to a six-week low on Tuesday as it continues to suffer amid expectations for lower demand overall.

Sugar prices on Tuesday closed lower for a fifth session, with London sugar at a 1-1/2 month low. Robust supplies and suspect demand continue to pressure sugar prices.

Uncertainty regarding reopening plans amid spikes in coronavirus cases also weighed on prices.

October raw sugar ​​settled down 0.26 cent, or 2.2%, at 11.32 cents per lb, having hit a six-week low of 11.27 cents earlier in the session. August white sugar ​​settled down 20 cents, or 0.1%, at $334.90 a tonne.

Weakness in energy markets can boost sugar production in the center-south of Brazil where it can be used either to make the sweetener or biofuel ethanol.

"The rumblings in the oil market are making the (sugar) market a little nervous," Commonwealth Bank of Australia analyst Tobin Gorey said in a note.

Not to forget that, sugar supplies are ample after Unica reported last Thursday that Brazil's Center-South sugar production in the second half of June rose 23.3% y/y to 2.728 MMT, with the percentage of cane used for sugar climbing to 47.42% in 2020/21 from 37.06% in 2019/20.

On the bullish side for sugar, however, Unica also reported that total exports of ethanol by Brazil Center-South mills in June rose 44% y/y to 267 mln liters, which indicates pressure for less sugar production and more ethanol production.

Support and Resistance for sugar#11 lies at 11.10 cents and 11.66 cents per lb, respectively.

(Commodities Control Bureau)


       
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