MUMBAI (Commoditiescontrol) – Sugar prices on the Intercontinental Exchange ended firm last week week in volatile trade driven by the Brazilian real’s sharp rise against the US dollar.
The most tracked, Sugar no 11 or the July contract rose 3.8% to 12.10 cents, while the London August white sugar rose 1.9% to $330.60 a tonne. The contract traded between 11.13 cents and 12.60 cents. Volumes in the July sugar no 11 contract were at 79,995 compared with 70,347 a week ago. The Sugar no 5 traded in the wide range of $321.70 and $331. Volumes in Sugar no 5 stood at 5,585 compared with 4,552 a week ago.
During the week, the Brazilian real has risen 2.5% against the US dollar, touching an over two-month high of 3.91. The real began a sharp upswing Tuesday onwards after the Banco Central Do Brasil unveiled measures to simplify regulations and make financial markets more accessible.
The president of the central bank Roberto Campos Neto said the country aims to make the real fully convertible within two to three years, to reduce the cost of cross-border trade and investment.
Some changes to the exchange rate legislation would be made in the near future, Neto said.
A rising real discourages Brazilian millers from increasing their sugar production as export turn unprofitable.
On Thursday, Canaplan consultancy said it expected sugar allocation in 2019-20 to fall to around 34% from 38% forecasted earlier amid low prices and strong demand for ethanol in Brazil rather than sugar.
Prices were also firm amid rising expectations that consumption in the European Union is on the rise.
According to data released on Tuesday, exports of sugar from the European Union so far in 2018-19 nearly halved to 1.18 million tonnes, from 2.43 million tonnes exported over the same period last year. Meanwhile, cumulative imports inched up to 1.15 million tonnes compared with 897,000 tonnes in the same period last season.
Meanwhile, easing crude oil prices blunted the rise in prices. During the week, the July crude oil contract tumbled 5.5% to $53.50 a barrel because of worries over easing demand and as the weekly EIA data was better than expectations.
The weekly EIA report showed that US crude inventories in the week to May 24 fell only 282,000 barrels compared with expectations of a fall by 500,000 barrels. Gasoline stockpiles unexpectedly rose by 2.2 million barrels, higher than expectations of 800,000 barrels. US crude oil production during the week rose 0.8% on week to touch a record 12.3 million bpd hit recently.
According to the CFTC data, managed money traders were net short 175,964 contracts as on the week ended May 28, adding net short positions by 9,223 positions. Open interest for the week stood at 1,184,772, up 17,632 on
If the Brazilian real continues rising against the US dollar this week as well, prices could get propelled further to around 12.30 cents.
(By Commoditiescontrol Bureau)
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