Mumbai, 28 Mar (Commoditiescontrol): ICE raw sugar futures settled lower on Wednesday, snapping two straight sessions of gain, as world's largest sugar exporter Brazil has reported higher sugar production. Adding pressure is dollar gaining strength against global currencies, making buying natural sweetener expensive.
ICE sugar futures for May delivery settled down 0.20 cents or 0.9% at 22.19 cents per lb. Prices lost 1.2% last week.
May London white sugar contract fell $7.80 or 1.2% at $645.60 a metric ton, coming off 1-month high recorded in the previous week. The contract added 2.5% during just ended week.
On Wednesday, Unica reported that Brazil's Center-South sugar output in the first half of March was 64,000 MT, up 313% from the same time last year. Also, Brazilian sugar output so far in the 2023-24 marketing year through mid-March is up 25.8% on year to 42.245 MMT. Brazil's sugar mills have ramped up their cane crushing for more sugar and less ethanol. Mills have crushed 48.96% of total cane for sugar production this year, up from 45.93% last year.
Earlier this week, sugar gained support as US producers called for a reduction in sugar imports from Mexico. The American Sugar Coalition wants the government to lower the amount of sugar Mexico can send to the US by 44%, which would likely boost prices and require the US to purchase sugar from other countries, tapping already tight global sugar supplies.
ASR Group, the largest sugar company in the United States, has six to eight weeks of raw sugar stocks at its Baltimore sugar refinery, which is supplied by vessels coming to the Port of Baltimore. The port is blocked after the collapse of a bridge.
The Baltimore refinery is one of the largest plants in the country, producing 6 million pounds of refined sugar per day.
Egypt on Monday extended the deadline for offers in its latest tender for 50,000 metric tons of raw cane sugar to March 30 from March 23.
In recent times, the natural sweetener is hurt by the forecasts for rains in Brazil. The top producer's sugar belt is likely to receive rains by end of this week and early next week, but it is unclear if they will be enough to improve the crop outlook.
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.
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.
Commodity Futures Trading Commission (CFTC) data on showed speculators have reduced 5,465 contracts to their net long position in raw sugar to 8,011 lots.
For Thursday, support for the May Sugar contract is at 21.84 cents and 21.48 cents, with resistance at 22.47 cents and 22.74 cents.
(By Commoditiescontrol Bureau: 09820130172)
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