MUMBAI (Commoditiescontrol) – Sugar prices on the Intercontinental Exchange ended mostly down last week tracking weaker Brazilian real and improving expectations of the global sugar deficit in the current year.
The most tracked, Sugar no 11 or the May contract eased 0.3% to 12.53 cents, while the London May white sugar fell sharply by 3.2% to $324.80 a tonne. The March 2020 contract inched up by 0.2% to 13.80 cents, while the October contract was also up 0.2% to 12.95 cents.
Volumes in the May sugar no 11 contract was down at 58,209 from 63,458 a week ago.
Sugar prices started the week on a bearish note as different surveys indicated at better supply in 2019-20.
S&P Global Platts’ survey showed that the sugarcane crushed percentage channeled towards sugar production in Brazil’s centre-south region is likely to rise by 3% to around 38.3% in 2019-20. In addition, sugar output next year is seen increasing by around 8% to 28.5 million tonnes.
Platts Kingsman also reduced its 2019-20 global sugar deficit projection to 1.9 million tonnes from 3.6 million tonnes forecasted earlier because of lower consumption and higher output by Russia, Iran, and Egypt.
Recently, a Reuters poll had estimated that Brazil’s centre-south mills may produce 28.4 million tonnes of sugar in 2019-20, about 7% higher than the 10-year low of 26.5 million tonnes in the current year.
The fall in prices got a break mid-week with Brazilian sugarcane industry UNICA’s crushing report which showed that Brazil’s center south sugar crushing in the first half of March, was down 53% at 1.59 million tonnes. Total sugar production for the region now stands at 26.38 million tonnes, down 26.5% on year.
However, the downward move resumed with the Brazilian real touching an over four-month weakness against the US dollar to 4.00 per US dollar. The real slipped after Brazil’s lower house unanimously approved of a bill that gave more control to the Congress over the federal budget while taking away some power from President Jair Bolsonaro. A weak real makes sugar exports more lucrative thereby increasing supply in the global market.
Although the real managed to recoup some of its losses, it fell by 0.5% against the US dollar during the week.
Prices remained subdued towards the end of the week as more reports reiterated expectations of better supply.
On Thursday, FCStone revised its global sugar deficit in 2018-19 to 300,000 from 700,000 forecasted earlier. In 2019-20, Brazil’s sugar production in central-south is seen at 29.5 million tonnes, up 11% on year. Cane production too is seen improving to 568.6 million tonnes next year, higher than 564.7 million tonnes forecasted earlier.
Some contracts inched up while a sharp fall was prevented in the benchmark contracts because of the rise in global crude oil prices.
The May WTI crude prices ended up 1.8% to $60.14 per barrel during the week, after touching a four-month high of $60.73 on Friday amid threats of US sanctions on Iran and Venezuela.
For the second week in a row, speculators reduced their short positions this week according to data released by the US Commodities Futures Trading Commission Data.
According to the data, managed money traders were net short 95,694 positions as on the week ended March 26, cutting net short by 7,370 positions. Open interest for the week stood at 1,067,069 up 9,239 on week.
As the harvest season of the second cane crop in Brazil nears, it remains to be seen when millers begin their cane crushes. According to some media reports, the spell of showers earlier this month has delayed harvesting and thereby crushing.
Prices are likely to hinge on weather conditions in Brazil in the near-term. A drier climate could augur well for crushes, thereby sending prices further lower. The support for the May contract is seen at 12.46 cents, followed by 12.40 cents.
(By Commoditiescontrol Bureau)
0 Comments 
Post Comment 
