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ICE Sugar ends higher tracking firm oil

28 May 2022 9:07 am
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Mumbai, 28 May (Commoditiescontrol): ICE sugar futures settled Friday's session higher tracking strong oil amid prospect of less sugar exports from Brazil. Prices also found support from strength in the Brazilian real which rose to a 5-week high against the dollar. A stronger real discourages export selling by Brazil's sugar producers.

July sugar #11 closed up by 7 (0.36 percent) to 19.61 cents, and Aug London white sugar #5 closed up by 2.40 (0.42 percent) at $567.80 a tonne.

Strength in crude oil served as top bullish factor for sugar. Crude prices Friday climbed to a 1-week high. Higher crude prices benefit ethanol prices and may prompt Brazil's sugar mills to divert cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.

Another positive for sugar is smaller output from Brazil after Unica reported Wednesday that Brazil 2022/23 Center-South sugar production through May 15 was 2.737 MMT, down 39.8 percent on year.

Ethanol production was down 10 percent to 1.65 billion liters, said Unica, whose ethanol data also includes fuel made from corn.

Cuba's emblematic sugar harvest topped out at just over half of the communist-run government's target this year, according state-run newspaper Granma, representing another major blow to the country's already crisis-racked economy.

That 2021-2022 harvest hit just 52 percent of the goal for the season, Granma said, or approximately 474,000 tons. That is nearly half of last year's crop of 800,000 tonnes, which was already the worst since 1908.

Ramped-up sugar output in India is bearish for prices after data from the Indian Sugar Mills Association (ISMA) reported that India's 2021/22 sugar production during Oct 1-May 15 rose 14.4 percent on year to 34.88 MMT.

The outlook for larger sugar crop sizes in India and Thailand is bearish for sugar prices. On April 15, the ISMA raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up 12.2 percent on year, and said sugar exports would jump to a record 9 MMT. India is the world's second-largest sugar producer.

India restricted sugar exports to 10 million tonnes in the current marketing year, which may keep price movement in the narrow range.

The Thailand Office of the Cane & Sugar Board reported on March 22 that Thailand's 2021/22 sugar production from Dec 7-Mar 19 was at 9.6 MMT, and the total Thailand 2021/222 sugar harvest Dec 7-Mar 31 may reach 10 MMT, a 3-year high. As a result, the Thailand Office of the Cane & Sugar Board expects Thailand to export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world's second-largest sugar exporter.

The outlook for bigger global sugar supplies is negative for prices. Green Pool Commodity Specialists on April 29 shifted its projection for the 2022/23 global sugar market to be in surplus by 1.41 MMT versus a January forecast of a 742,000 MT deficit.

For Sugar #11 Jul '22 contract, support is placed at 19.43 cents while resistance seen near 19.76 cents.

(By Commoditiescontrol Bureau: +91-22-40015505)

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