MUMBAI (Commoditiescontrol) – Sugar prices on the Intercontinental Exchange ended down despite the fall in sugar output and high ethanol output in 2018-19 as crude oil prices trended lower.
The most tracked, Sugar no 11 or the July contract fell 3.9% to 12.65 cents, while the London August white sugar rose 0.4% to $340.00 a tonne. Volumes in the July sugar no 11 contract rose to 95,732 compared with 60,585 a week ago. Volumes in the Sugar no 5 slipped to 5,921 from compared with 6,362 a week ago.
Crude oil prices have been swinging in a volatile range this week with prices rising sharply on Monday following the US government’s announcement to end waivers to countries importing oil from Iran in a bid to thwart Iranian exports.
However, from a six-month high of $66.60 a barrel on Tuesday, prices eased around over 1% to $62.28 a barrel on Friday following comments by US President Donald Trump that he had called the Organisation of Petroleum Exporting Countries and demanded that they bring down gasoline prices.
While on one hand easing crude prices prompt Brazilian millers to allocate lower cane crushes for ethanol production, ethanol output in 2018-19 jumped to a record in Brazil.
Brazil's national crop agency Conab on Tuesday reported 2018-19 ethanol production rising 23.3% on year to a record 33.6 billion liters. The proportion of sugar diverted to sugar production during the year fell to a record low of 36.4% from 45.9% a year ago. Brazil’s 2018-19 sugar output, however, during the year dropped 17.2% on year to an 11-year low of 31.4 million tonnes.
The data pushed up sugar prices, although the fall in the Brazilian real to a near 1-month low of 3.99 per dollar provided some resistance.
Ethanol prices have been on the rise as the showers in April that have delayed harvesting in Brazil. According to some reports, prices of Brazil hydrous ethanol prices last week had risen to a record high of 2,090 reals per cubic meter, up 24% so far from April 1.
Providing some bullish support mid-week was Brazilian sugar industry association UNICA’s report which showed that the country’s total sales of hydrous ethanol jumped 26% on year in the first half of April to 1.18 billion liters. Sugar production fell 52% in the first half of April to 340,000 tonnes, UNICA said.
UNICA also said mills in Brazil’s centre-south region crushed 13.865 million tonnes of sugarcane at the beginning of 2019-20, a 38% on-year drop and the lowest since 2015-16.
However by Thursday, sugar prices seemed to have brushed aside all the data released during the week and seemed to be blindly tracking the fall in crude oil prices.
According to the CFTC data, managed money traders were net short 29,666 positions as on the week ended April 23, trimming net short positions by 14,813 positions. Open interest for the week stood at 988,898 down 1,927 on week.
Showers in Brazil over the weekend are likely to delay harvesting yet again could provide some support at the beginning of the week.
A lot also depends on the crude price movements as the pace of harvest picks up. A further fall in crude oil prices could lead sugar to test 12.40 cents on the downside.
(By Commoditiescontrol Bureau)
0 Comments 
Post Comment 
