Mumbai Commodities Control - NY Sugar settled flat-to-Weak for the week ended 29th january, as the most-active March’21 contract ended 4 points or 0.25% lower. The contract spent most of its time sub-16 cents, however it did manage to touch levels close to 16.20 cents per lb during the week. This is the second straight week closing for ICE raw sugar futures.
Sugar #11 shed 4.8% for the week-ended 22nd January, slipping under 16 Cents level for the first time.
During the latest week, the sugar market moved in a range primarily due to lack of strong fundamentals and consistent decline in speculative net longs.
CFTC reports point towards the 3rd straight week of slide in the net longs for the week ended 27th January. Net longs dropped by 12,820 contracts to 206,487 contracts. This was the result of simultaneous drop on the longside and rise on the short side. The open interest was registered at 13,02,327 contracts vs 12,98,903 contracts.
Funds appeared to have paused after helping to push prices to the highest level in 3-1/2 years.
It is to be noted that sugar prices on Friday moved higher as NY sugar rebounded from a 2-week low and closed higher, and London sugar climbed to a 1-week high.
March raw sugar settled up 0.24 cents, or 1.5%, at 15.83 cents per lb. The contract ended the month up 2.2%.March white sugar settled up $14.50, or 3.3%, at $456.10 a tonne.
Reduced sugar exports from India boosted prices on Friday after the president of India's Shree Renuka Sugars Ltd. said that a shortage of shipping containers in India is reducing sugar exports.
India has only exported about 70,000 MT of sugar so far this month, well below the 370,000 MT of sugar exported at the same time last year. India is the world's second-biggest sugar exporter.
During the week, sugar prices saw downward pressure from a slump in the Brazilian real as well.
NY sugar on Friday initially fell to a 2-week low on ample supplies from Brazil.
Dealers, meanwhile, said the market has lost upward momentum after climbing to the highest in more than 3-1/2 years earlier this month, but there remained solid support around 15.50 cents.
On Wednesday, Unica reported that Brazil's Center-South sugar production in the first half of January was up 77% y/y at 8 MMT and that 2020/21 Brazil Center-South sugar production through mid-January.
Some of the bullish factors that cushioned raw sugar prices through the week included reduced sugar output from Thailand, the world's second-largest sugar exporter. The Thailand Office of the Cane & Sugar Board reported at the beginning of the week that Thailand's 2020/21 sugar production from Dec 10-Jan 21 fell 35% y/y to 3 MMT.
Not to forget sugar prices got a fillip on Thursday, as the Indian Sugar Mills Association (ISMA) cut its India 2020/21 sugar production estimate to 30.2 MMT from an October estimate of 31 MMT, citing lower cane yields.
Also, Germany's second largest sugar refiner Nordzucker on Thursday said it has returned to profit as the EU sugar market recovered, following a cost-saving programme.
Meanwhile, the start of the new Brazilian sugar season is likely to be delayed due to slower development of sugar cane fields, industry group Unica said on Wednesday.
Indonesian state company Bulog has issued an international tender to purchase and import 53,000 tonnes of raw sugar, European traders said.
It is to be noted that sugar prices on Jan 14 rallied to a 3-1/2 year nearest-future high on the outlook for tighter global sugar supplies. Citigroup on Jan 14 raised its 2021 sugar price estimate to 14.7 cents/lb from 13.6 cents/lb, citing "disappointment in the scale" of the government of India's subsidy for sugar exports.
Market analysts are of the opinion that an uptrend will start as soon as the market rises above resistance level 16.00 cents, which will be followed by moving up to resistance level 16.73 cents. However, if the market continues to trade below resistance level 16.00 cents, it will be followed by support level of 15.10 cents and if the slide continues, it may reach the support level 14.10 cents/lb.
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