Mumbai (Commodities Control) - NY Sugar marked a comeback with a price rise of 3.83% for the week ended 6th November. The sweetener has risen after a steep decline registered for the week ended 30th October, when March’21 futures on ICE shed 2.45% for the week.
Previously, ICE raw sugar witnessed six consecutive weekly gains until 23rd October, driven by fund buying against a backdrop of uncertainty about the extent to which India might subsidise exports in the current season.
Sugar futures closed up on Friday as the dollar weakened against a basket of currencies and the prospect of a divided Congress in the United States boosted risk appetite by funds.
Technically for the week ended 3rd November, long liquidation pressure in managed money shed 18,402 contracts from the long side, thereby reducing net longs by 16,494 to a net long of 246,556 contracts.
Last week, net longs rose by 8,494 contracts, for a total net long of 263,050 contracts. It is interesting to note that net longs dipped after six straight weekly gains. Open interest was registered at 12, 12, 101, up 5,374 contracts.
There was support from some positive fundamental news from other soft commodities too.
Sugar prices on Friday pushed higher the entire day on strength in the Brazilian real against the dollar. The real jumped 2.22% on Friday to a 1-1/2 month high against the dollar, which discourages export selling from Brazil's sugar producers.
In Fact the week bagan on a sweet note for ICE raw sugar, as prices trended up to 8-1/4 month highs on Monday through Tuesday amid concerns that Brazil's dry conditions may curb sugarcane yields and reduce Brazil's sugar production.
Raw sugar futures on ICE closed down on Tuesday after hitting a fresh eight-month peak earlier in the session, due to hedging future sales. Sugar prices initially rallied higher on strength in crude prices, along with a delay in Indian sugar exports. March raw sugar closed down 0.25 cent at 14.72 cents per lb after touching a peak of 15.23 cents in the session, the highest for the front month since Feb. 25.
Irregular rain in Brazil's sugar-growing areas is keeping soil moisture levels below normal; major tailwind to firm sugar prices.
Making a comeback on Friday, March raw sugar settled up 0.43 cent, or 3%, at 14.91 cents per lb. December white sugar, which expires next Friday, was up $10.4, or 2.2%, at $400.30 a tonne.
Dealers said the market continued to be buoyed by uncertainty over India's export policy, with higher prices potentially needed to encourage shipments from the world's No. 2 producer.
The open interest for December stood at a large 24,313 lots as of Nov. 5, indicating a large delivery could be on the cards.
Meanwhile this weekend, sugar prices steadied at the major markets in India. However, S grade sugar was slightly up in Mumbai Vashi. Sugar prices in Mumbai Naka were bearish. Meanwhile private millers in Uttar Pradesh began new season sugar sales at slightly higher prices.
Sources reveal that market response was poor towards new sugar due to weak demand. In UP, around 40 sugar mills have started cane crushing. Many millers started selling new sugar.Though millers wanted to increase sugar prices, but weak demand is quite a headwind, for now.
Experts see a strong chart structure going ahead.
According to Michael Seery of Seery Futures, ‘Prices are trading above their 20 & 100 DMA as this trend is strong to the upside and by far the strongest trend out of the entire soft commodity sector. However they add that for the bullish momentum to continue, prices have to break the November 3rd high of 15.23 cents. Thus, it is advisable to stay long to touch the levels next week.’
Support and Resistance for Sugar #11 lies at 14.45 cents and 15.18 cents per lb, respectively.
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