MUMBAI (Commoditiescontrol) - Sugar prices on the Intercontinental Exchange (ICE) ended down last week because of weaker Brazilian Real, export subsidy announced by Indian government and the Brazil government’s decision to increase tariff-free US ethanol imports to 800 million litres per year from the current 600 million.
The most tracked, Sugar no 11 or the October contract ended down 33 points at 11.14 cents, while the London October white sugar ended down $8.8/MT $301.6 a tonne. Volumes in the sugar no 11 rose to 3073216 contracts compared with 192774 for last week. Volume for the week in Sugar no 5 stood at 36381 contracts compared with 24009 a week ago. Spread between Sugar no11 October19 and March 20 contract was 109 points.
Prices started on a soft note on Monday as the Brazilian real continued to stay weak. The real touched intraday low of 4.17 on Monday, a fresh 11 month low. Fall in crude prices due to uncertainties of US-China trade talks added to weakness in sugar prices.
On Tuesday also sugar prices continued to remain week on weak Real and report from Rabobank International that new trade pact between the US and Mexico will reduce the latter’s sugar exports to the US and instead export nearly 500,000 tonnes of sugar in the global market before October.
The sugar no 11 had touched a fresh 11-month low of 11.09 cents, while the sugar no 5 hit an over six-week low of $309.20 following the sugar export subsidy announcement by the Indian government on Wednesday.
The Indian government’s export subsidy plan of up to 6 million tonnes to sugar mills. This move, intended to clear the sugar glut in the country, is likely to add to the global sugar supply.
Prices also eased on reports that the Brazil government on Friday had approved to increase tariff-free US ethanol imports to 800 million litres per year from the current 600 million. The rise in ethanol imports may prompt Brazilian millers to divert their cane crushes towards sugar production rather than ethanol.
Spread between October 19 and March contract was unusually high as the market is expecting huge delivery and quality is said to be inferior against October contract. Considering these facts we may see the continuation of current downward trend till expiry of October contract.
Support for October contract is 10.91cents/lb and resistance is 11.41cents/lb.
(By Commoditiescontrol Bureau)
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