MUMBAI – Sugar prices on the Intercontinental Exchange ended down last week in line with crude oil prices and as Brazilian real slipped from its multi-month highs.
The most tracked, Sugar no 11 or the October contract ended down 2.1% to 12.36 cents, while the London August white sugar ended down 2.6% to $326.30 a tonne. Volumes in the sugar no 11 stood at 66,714 compared with 52,121 a week ago. Volumes in Sugar no 5 was at 8,732 compared with 9,076 a week ago.
Sugar prices started on a weak note tracking global crude oil prices. The August WTI crude oil prices fell 1.6% during the week to $57.51 a barrel. Weaker crude oil prices prompt Brazilian millers to divert their crushes towards sugar production over the biofuel ethanol. During the week, prices touched an over two-week low of $56.04 a barrel amid expectations that the shale oil production in the US would make up for the crude oil production cut decided by the Organisation of Petroleum Exporting Countries
Meanwhile, the July contract expiry’s record delivery at 2.1 million tonnes this week added to the fall. Delivery of 41,488 lots was worth over $570 million based on last Friday’s closing price of 12.32 cents per lb.
Demand for sugar in global markets too seems to be waning according to the Brazilian trade data. In June, Brazil exported 1.40 million tonnes of raw sugar, down from 1.71 million tonnes a year ago.
Despite a brief rise in crude oil prices and the Brazilian real mid-week, by Friday the real gave up its three-month gains, dragging down sugar prices.
Thursday, the Brazilian real had gained to an over three-month high of 3.79 to the dollar. However, on Friday, it slipped 0.6% to 3.84 per US dollar.
At lower levels, prices found support from the Indian Sugar Mills Association’s 2019-20 estimate on Monday that pegged output for the year at 28.2 million tonnes of sugar, down 14.5% on year due to deficient monsoons in the country.
According to the Indian Meteorological Department, Indian monsoons have been below the average for the fifth straight week in the week ended July 3. This has hit agricultural sowing as well with area sown so far under kharif crops falling 27% at 234.33 lakh hectare month, IMD said.
However, with better rainfall predicted for July and August, plantings may improve going forward and could soften sugar prices as well.
The commitment of Traders data will be issued on Monday as US markets were shut on July 4 for Independence Day.
The October contract could trade in the wide band of 12.13-12.77 cents this week.
(Commoditiescontrol Bureau)
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