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Weekly ICE Sugar: Ends Slightly Up as Brazilian Real Recoups Losses

28 Oct 2019 12:33 am
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MUMBAI – Sugar prices on the Intercontinental Exchange ended slightly up last week as the Brazilian real recovered most of its previous week’s losses, while crude oil prices gained.

The most tracked, Sugar no 11 or the March 2020 contract ended up 0.2% at 12.35 cents, while the London December white sugar ended up 0.1% at $333.60 a tonne. Volumes in the sugar no 11 dropped to 38,669 compared with 45,952 a week ago. Volumes in Sugar no 5 fell to 3,630 compared with 8,493 a week ago.

Sugar prices started on a weak note as the Brazilian real extended the previous week’s weakness. The real had fallen to a three-week low of 4.19 per dollar the previous week weighing down on prices.

However, the real soon turned around the following days, hitting multi-week highs thereby helping sugar prices recover.

By the middle of the week, the real inched up above the 4.0 real mark, hitting a two-month high of 3.99 against the US dollar.

The real’s rise coupled with the sharp rise in crude oil prices lifted sugar prices.

The WTI December crude oil prices jumped 5.4% during the week to $56.66 per barrel amid expectations of low supply and expectations of demand with the renewed trade optimism surrounding the US-China deal.

A firm real and a rise in crude oil prices typically prompt Brazilian millers to maintain a higher ratio of their cane crushes towards ethanol rather than sugar production, thereby pushing up sugar prices.

China’s trade data on Wednesday raised sentiment as it showed that sugar imports in September was 420,000 tonnes, up 123% on year. On a cumulative basis, Chinese imports up to September were 2.39 million tonnes, up 22.3% on year.

However, a sharp rise in the sweetener was limited amid expectations of strong supply from India during 2020-21. Last week, Rabobank had forecasted significant exports from India on the back of a bumper crop in 2019-20 amid higher-than-expected rainfall in the country.

Some technical-based selling also provided some resistance at higher levels.

The latest sugar crushing data from the Brazilian sugarcane association UNICA also offered some resistance. On Thursday, UNICA said sugar production from the centre-south region of Brazil was 1.9 million tonnes in the first half of October, up 69% on year as the dry weather aided harvesting.

The latest CFTC data showed that managed money traders’ net short positions widened to 222,273 as on the week ended October 22, increasing net short positions sharply to 30,711 on week. Open interest for the week stood at 1,060,255, up 26,440 on week.

This week the markets are likely to take cues from the Brazilian real and crude oil price movements. If the real continues its recovery against the dollar, sugar prices could continue to rise. Expectations of a global sugar deficit too could resurface adding to the price rise.

The March contract is likely to trade in the 12.26-12.42 cent range with an upward bias.

(Commoditiescontrol Bureau)

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