Mumbai, 7 May (Commoditiescontrol): ICE raw sugar futures advanced further on Monday, as India reported decline in sugar production raising supply concerns. London ICE white sugar did not trade, with markets in the UK closed Monday for the May Day holiday.
ICE sugar futures for July delivery settled up 0.20 cents or 1.04% at 19.48 cents per lb. It lost 7.1% this week. ICE confirmed on Wednesday a large delivery on the expiring May contract of around 1.67 million tons. Traders were split on the possible impact to the market of such a large delivery, which would usually be a bearish sign.
Dealers said concern that hot weather in Thailand could damage sugarcane crops provided some support, as well as the dry weather in Brazil's Centre-South.
Meanwhile, on Monday, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces had posted record-high temperatures this month, with new highs beating records as far back as 1958.
The Indian Sugar and Bioenergy Manufacturers Association reported Monday that India's 2023/24 sugar production from Oct-Apr fell 1.6% on year to 31.4 MMT as more sugar mills closed for the year and ended their sugarcane crush. As of Apr 30th, 516 Indian sugar mills had closed operations compared with 460 mills that closed at the same time last year.
Strength in the Brazilian real also supported sugar prices as the real Monday rallied to a 3-1/2 week high against the dollar. Strength in the real discourages export selling from Brazil's sugar producers.
Citi maintained its forecast for another deficit in 2024/25 and for raw sugar futures to trade in the range of 22-25 cents per pound next quarter. "The international sugar market does not seem to have adequately priced in risks of crop downgrades for the 2024/25 CS Brazil season," Citi said in a note.
In recent times, Sugar prices drifted lower, hit by ideas of better supplies from Asia and Brazil, but dealers said the fall attracted some bargain buying on Thursday.
Spell of rain in Brazil led the improved outlook for cane production in the 2024/25 season and a weakening of the Brazilian currency is likely boosting selling by mills there.
Brazilian crop agency - Conab, on Thursday projected that Brazil's 2024/25 sugar production will climb 1.3% y/y to a record 46.292 MMT as 2024/25 sugar acreage in Brazil increases by 4.1% to 8.7 million hectares (21.5 million acres), the most in seven years. For the 2023/24 marketing year, however, Conab last Thursday cut its Brazil sugar production estimate by 2.6% to 45.7 MMT from a November estimate of 46.9 MMT.
Sugar beet area and output will increase by 2% in the European Union next season thanks to favourable market conditions and despite delayed sowing.
Elsewhere, Vietnam's Office of the Cane and Sugar Board reported that Thailand's 2023/24 sugar production from Dec-Mar was 8.75 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT.
Ukraine is likely to have used up its proposed 2024 sugar export quota from the European Union by next month and could have to cut the area sown with sugar beet by up to 20% unless it finds other markets, a top official said on Thursday.
Commodity Futures Trading Commission (CFTC) data on showed speculators have increased their net short position in raw sugar by 9,659 lots to 37,684 lots.
For Tuesday, support for the Jul Sugar contract is at 19.25 cents and 19.01 cents, with resistance at 19.62 cents and 19.75 cents.
(By Commoditiescontrol Bureau: 09820130172)
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