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ICE Raw Sugar Ends Up, Inches Close to One – Month High

26 Sep 2020 8:36 am
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Mumbai (Commodities Control) – Raw sugar prices closed up on Friday, in sight of this week's one-month high, with a lack of producer selling clearing the way for funds to push prices higher.

Concern about the sugar crop in Thailand, the world's second-biggest sugar exporter, pushed sugar prices higher on Friday. The Thailand Sugar Mills Corp. said on Friday that Thailand 2020/21 sugar production will fall 13% y/y to an 11-year low of 7.2 MMT as dry weather this year ravaged cane plantations.

Another positive factor for sugar was the action by the U.S. on Tuesday to raise Brazil's sugar export quotas to the U.S. by 80,000 MT to 310,000 MT.

Also, the USDA's Foreign Agricultural Service (FAS) on Tuesday cut its Australia 2020/21 sugar production estimate to 4.3 MMT from an April forecast of 4.5 MMT and to cut its Australia 2020/21 sugar export estimate to 3.40 MMT from an April forecast of 3.54 MMT.

March raw sugar ​​settled up 0.14 cent, or 1.0%, at 13.51 cents per lb, after setting a one-month high on Wednesday of 13.57 cents. Raw sugar ended the week with a 0.67% gain. December white sugar ​​settled up $2.30, or 0.6%, at $376.50 a tonne.

Dealers said the market could see further strength in the short term, especially as producer selling has been limited, but the outlook for next season remains poor, with many expecting a surplus.

The coronavirus pandemic is seen cutting global sugar consumption by 2.5 million tonnes in the 2019-20 season (Oct-Sept), but a recovery is seen next season, analysts S&P Global Platts said on Friday.

It expects prices to rise to around 14.5 cents per pound next year.

Marex Spectron said sugar output in Thailand, the world's second largest sugar exporter, will reach just 7.3 million tonnes next season, down from 8.3 million tonnes this season. Thailand’s cane output in 2019/20 was the lowest in a decade.

Through the week, a bearish factor for sugar was the action by Rabobank on Thursday to cut its global 2019/20 sugar deficit estimate to 1.0 MMT from a previous estimate of 4.3 MMT, citing a strong Brazil sugar harvest and an estimated 1.5% y/y drop in global sugar demand due to the Covid pandemic.

Rabobank also said it sees a "well supplied" sugar market in the coming year and forecasts a global 2020/21 sugar surplus of 0.2 MMT.

Support and resistance for Sugar #11 lies at 13.32 cents and 13.64 cent per lb, respectively.

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