Mumbai, 03 Dec (Commoditiescontrol): Sugar prices continued their downward trend on Monday, with New York raw sugar futures hitting a 2.5-month low and London white sugar futures reaching a 3-week low. A 1.61% depreciation in the Brazilian real against the U.S. dollar played a key role, as a weaker real often encourages Brazilian producers to increase sugar exports, pressuring global prices.
March raw sugar futures on ICE closed at 21.07 cents per pound after touching a 2-month low of 20.70 cents. London December white sugar futures settled unchanged at $547.70 per metric ton. Last week, New York raw sugar fell by 3.2%, driven by currency fluctuations and updated global supply projections.
The real's depreciation has triggered export sales from Brazilian producers, leading to long liquidation in sugar markets. Meanwhile, Brazil's Center-South region reported a 59.2% year-on-year drop in sugar production in early November, with Unica data showing output at just 898,000 metric tons. S&P Global estimated a 55.5% production decline for the first half of November compared to the same period last year. However, analysts at Datagro anticipate a strong recovery for Brazil's sugar sector in the 2025/26 season, with production expected to rebound to 42-43.2 million metric tons.
The International Sugar Organization (ISO) revised its forecast for the 2024/25 global sugar deficit downward to 2.51 million metric tons from an earlier estimate of 3.58 million metric tons. Additionally, the ISO raised its surplus estimate for 2023/24 to 1.31 million metric tons, suggesting an improvement in supply prospects. Despite this, excessive rainfall and drought in key sugar-producing areas remain potential challenges, along with concerns about ethanol demand.
Citi analysts maintained a cautious yet optimistic stance, with a three-month price target for raw sugar at 24 cents per pound and a 12-month forecast at 25 cents. Technical indicators suggest support levels at 20.45-20.76 cents per pound and resistance at 21.32-21.57 cents. Volatility is likely to persist as traders monitor Brazil's production recovery, global weather patterns, and demand trends.
Sugar markets face a mix of bearish and bullish forces, with the Brazilian real and revised supply forecasts adding downward pressure, while weather risks and ethanol dynamics provide support.
(By Commoditiescontrol Bureau: 09820130172)
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