MUMBAI – Sugar prices on the Intercontinental Exchange ended down during the week due aggressive short selling by managed money/speculators their net short position almost doubled during the week.
The most tracked, Sugar no 11 or the July contract fell 2.41% to 11.72 cents, while the London August white sugar dropped 1.16% to $323.60 a tonne.
Market is caught up between shot term oversupply and deficit in the long term. Indian Sugar Mills Association reported that sugar output in the current season could touch a record 33 million tonnes compared with 32.5 million a year ago. Other negative news was from Brazil’s state-owned national supply company Conab which pegged Brazil’s sugar production to rise 17% on year to 34.1 million tonnes in 2019-20 .Apart from this news external factors such as weak crude, Brazilian real and weakness in the global financial market due to fall out of US-China trade deal dented the sentiment in the Sugar market.
But at the same time forecast for 2019-20 is indicating a global deficit of 1.7million tonnes against a surplus of .4 million tonnes in 2018/19. India and Thailand are likely to see fall in production by 10% whereas Brazil is likely to see a modest increase in production but it will not be enough to offset the shortfall of India and Thailand.
According to the CFTC data, managed money traders were net short 102408 contracts as on the week ended May 7, adding net short positions by 47913 contracts and reducing long by 2067 contract thereby increasing net short position by 49980 contracts. Open interest for the week stood at 10,85,076 contracts up 1,03,919 contracts on week.
But in Short term, it seems burdensome stock in India and weak global markets are likely to put further pressure in sugar prices and prices may see further downfall in coming weeks.
Weekly support level for July contract is 11.02 and 11.54 cents/lb while resistance is 12.03 and 12.54 cents/lb.
(Commoditiescontrol Bureau)
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