Mumbai, 21 Mar (Commoditiescontrol): ICE raw sugar futures settled higher on Wednesday, rebounding from one-week low as strength in the Brazilian real sparked short covering.
ICE sugar futures for May delivery settled up 0.13 cents or 0.6% at 21.77 cents per lb. Prices settled 4.5% lower during the week ended March 15th.
May London white sugar contract rose $8.90 or 1.44% at $628.80 a metric ton. The contract lost 4.3% for the week.
In the previous session, the natural sweetener was hurt by the forecasts for rains in Brazil. Rains forecast in top producer Brazil's sugar belt around the end of this week and early next week, but it is unclear if they will be enough to improve the crop outlook.
Dealers said the market looked technically weak after prices broke support at 22.05 cents/lb. They said that some fundamentals were also behind the market's weakness, such as an improvement in the final tail of the harvest in India and Thailand.
Last week, Fitch Solutions report suggested that the decreased sugarcane plantings in key Indian states, alongside an anticipated reduction in Brazil's centre-south region production for the 2024/25 season, are supporting sugar prices. It added, however, that current strong production out of Brazil is capping sugar's gains.
Fitch report contradicts a recent forecast by India's trade body that suggested improvement in country's sugarcane production. The Indian Sugar and Bioenergy Manufacturers Association Wednesday raised its forecast for India's sugarcane production in the 2023-24 marketing year (that began on Oct 1) by 2.9% to 34 MMT from January's forecast of 33.05 MMT. Higher sugarcane production likely means higher refined sugar production, depending on how much of that sugarcane is converted into ethanol.
A recent series of forecast by global industry observers painted a supply glut scenario. On Tuesday, Unica reported that Brazil's Center-South sugar output in the second half of February was 16,000 MT, up from zero in the year-earlier period. The sugar output so far in the 2023-24 marketing year rose 26% on year to 42.181 MMT. Unica also said it expects 28 mills in the Center-South region to resume production in the first half of March after their off-season pause, which would be more than the year-earlier figure of 10 reopening mills in that period.
Forecaster Maxar Technologies said that moderate rain is expected in Brazil's sugar-growing regions over the next five days, which fueled long liquidation in sugar futures.
Meanwhile, the global sugar deficit is expected to widen to 788,000 tons in the 2024/25 year, meaning supplies will remain tight and prices are likely to stay high, analyst Green Pool said in its initial forecast for the crop year.
The European Union reached a provisional agreement on Wednesday to grant Ukrainian food producers including sugar growers tariff-free access to its markets until June 2025.
Broker hEDGEpoint Global Markets cut its forecast for Brazil's Centre-South new sugarcane crop to 605 million tons from 615 million tons, citing drier than normal weather.
Commodity Futures Trading Commission (CFTC) data on showed speculators have added 17,391 contracts to their net long position in raw sugar to 21,950 lots.
For Thursday, support for the May Sugar contract is at 21.33 cents and 20.90 cents, with resistance at 22.00 cents and 22.24 cents.
(By Commoditiescontrol Bureau: 09820130172)
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