Mumbai, 16 Mar (Commoditiescontrol): ICE raw sugar prices ended higher on Friday, gaining support from the firm tone in gasoline prices. The strength in gasoline prices is bullish for ethanol prices and may prompt the world's sugar mills to divert more cane crushing toward ethanol production instead of sugar, thus reducing sugar supplies.
ICE sugar futures for May delivery rose 0.35 cents or 1.61% at 22.12 cents per lb. In the last week of February, the contract hit its lowest since mid-January at 22.71.
May London white sugar contract added $8.60 or 1.40% at $623.40 a metric ton.
Reports of 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, said Fitch Solutions. 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. Also, weakness in the Brazilian real weighed on sugar after the real on Friday fell to a 1-week low against the dollar. The weaker real encourages export selling from Brazil's sugar producers.
Dealers said there continued to be concerns that dry conditions will reduce the size of the cane crop in the Centre-South Brazil region during the upcoming 2024/25 season.
Sugar cane planting in the western Indian states of Maharashtra and Karnataka is expected to fall for the 2024/25 season starting Oct.1, an industry body said on Wednesday.
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.
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 Monday, support for the May Sugar contract is at 21.84 cents and 21.57 cents, with resistance at 22.27 cents and 22.43 cents.
(By Commoditiescontrol Bureau: 09820130172)
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