Mumbai, 11 Apr (Commoditiescontrol): ICE raw sugar futures edged lower on Wednesday, after having slid to one-week low, due to bearish carryover from last week's increased sugar production outlook. The forecast helped tame the nerve.
However, firm tone in crude oil prices helped keep floor under sugar prices. Higher oil prices prompts diversion of cane crushing for ethanol and thus curbing sugar supplies.
ICE sugar futures for May delivery settled little changed at 21.46 cents per lb. It hit a three-week low of 21.38 cents on Tuesday. Prices fell 2.4% last week.
May London ICE white sugar contract fell $1.60 or 0.3% at $632.50 a metric ton, coming off 1-month high recorded in the previous week. The contract eased 0.9% during the just ended week.
Dealers cited weather news from India about a likely normal monsoon season this year, which could benefit sugarcane production.
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.
On Tuesday, the Indian Sugar and Bioenergy Manufacturers Association reported that India's 2023/24 sugar production from Oct-Mar rose 0.4% on year to 30.2 MMT as more sugar mills stayed open to crush sugarcane. As of March 31, 322 Indian sugar mills had closed operations, compared with 346 mills that were closed at the same time last year.
Sugar prices Tuesday initially climbed to 1-month highs on strength in crude prices. Crude prices rallied to a 5-1/4 month high, which benefits ethanol prices and may prompt global sugar mills to divert more cane crushing toward ethanol production than sugar, thus curbing sugar supplies.
Meanwhile, the weather has dried up in Brazil's Centre-South region after the rains last week, so more mills are likely to start their sugarcane processing operations for the season.
Last week, sugar price were pressured by higher sugar production reported by the world's largest exporter Brazil. 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 may have a strong early harvest, which may be bearish in the short term, but harvested cane volumes may disappoint later in the year," Rabobank said in a report.
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.
Later, 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.
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.
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 Jul Sugar contract is at 20.93 cents and 20.78 cents, with resistance at 21.34 cents and 21.60 cents.
(By Commoditiescontrol Bureau: 09820130172)
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