MUMBAI(Commoditiescontrol)- Raw sugar prices on the Intercontinental Exchange hit its highest in nine months last Friday as Funds covered short positions amid squeezing supplies at current prices and producers scaled back selling.
The most tracked, Sugar no 11 or the March raw sugar settled up 0.11 cent, or 0.9%, at 12.94 cents per lb, having touched its highest since late February at 13.01. The contract was up 0.8% on the week. While, March London white sugar settled up $ 5 or 1.47%, at $344.9 per tonne.
The International Sugar Organization on Tuesday raised its forecast for a projected global sugar deficit in the 2019/20 season to 6.12 million tonnes from 4.76 million previously. ISO also said preliminary indications suggested a global deficit of 3.5 million tonnes for 2020/21.
In its bi-annual sugar report released on 21st November 2019, USDA has forecast the global 2019/20 sugar production to drop 3.2% year on year to 174.1 MMT. The report indicated that global 2019/20 sugar ending stocks will fall 9.9% y/y to 49.58 MMT. USDA has projected the global 2019/20 sugar consumption to climb 0.8% y/y to 174.684 MMT.
Earlier in the week, Commerzbank indicated that the deficit phase in sugar would lift the prices further. It further mentioned that high Indian reserves could result in exports to the global market that may likely slow the northward rally of sugar prices, as along with weak Brazilian Real.
The real hit its lowest ever level versus the dollar on Tuesday, raising the value of dollar-priced sugar in local currency terms and tempting producers to sell.
Meanwhile, ING has also pointed out its cautious approach with the global sugar prices considering higher Indian reserves. The threat of large amount of Indian sugar exports will likely keep a lid on the prices.
Prices have strong support at current levels as there is limited supplies from India at current prices in spite of large reserves because it is not economically viable for Indian mills to export at current global prices. Along with this record short position of speculators is keeping hopes of a rally in markets due to short covering in the near future if there is any negative news on the supply side.
CFTC The commitment of Trader data for the week ending November 26 was not released last week due to Thanksgiving holiday. Now it will be published on Monday 2nd December.
Support and resistance for the March contract are 12.68-13.14 cents/lb .