Mumbai (Commodities Control) – After two straight weeks of losses, ICE raw sugar made a dramatic comeback as March’21 contract ended 3.73% higher for the week ended 5th February. It is to be noted that the most active contract went to touch the highs of 16.75 cents per lb during the week. Rally in the latest week was primarily supported by global supplies concern and strength in crude oil prices.
Last week, NY Sugar settled 4 points or 0.25% lower for the week, as the active contract spent most of its time sub-16 cents. Sugar #11 shed 4.8% for the week-ended 22nd January, slipping under 16 Cents level for the first time.
Sugar prices on Friday closed sharply higher, with NY sugar at a 2-week high and White sugar futures on ICE rose to their highest level in nearly four years. The market buoyed by the strength of the front month March in the run-up to next week's expiry.
March white sugar rose $9.40, or 2%, to $474.80 per tonne after peaking at $477.70, a contract high and the highest level for the front month since April 2017.March raw sugar also posted strong gains, jumping 2.5% to 16.42 cents per lb.
Dealers noted there appeared to be significant interest in taking delivery of sugar when the March contract expires next Friday.
Interest in taking delivery has been buoyed by tightness in the physical market linked to a shortage of containers in countries such as India which has left the market more reliant on the break bulk supplies on which the contract is based.
Smaller sugar supplies from Thailand, the world's second-largest sugar exporter, fueled gains in sugar Friday after the Thailand Office of the Cane & Sugar Board reported that Thailand's 2020/21 sugar production during Dec 10-Feb 4 fell 25% y/y to 4.7 MMT.
Sugar prices garnered support after the European Commission on Monday cut its EU 2020/21 sugar production estimate to 15.6 MMT from a December projection of 16.2 MMT.
Sugar prices also garnered support Friday from a rally in crude oil to a new 1-year high.
Sugar prices have underlying support from solid sugar demand from Asia. Demand in Indonesia is a bullish factor for sugar prices after Indonesia's Trade Ministry December 30 said it would allow sugar refiners to import 1.93 MMT of raw sugar in the first half of 2021.
Also, Indonesia's Sugar Refiners Association recently said that it expects Indonesia's sugar imports to climb 10% y/y to a record 3.3 MMT in 2021 due to higher demand from the food and beverage industry. In addition, robust sugar demand in China is positive for prices after China's General Administrations of Customs reported last Monday that China's Dec sugar imports surged to 910 MT and China 2020 total sugar imports rose 55.5% y/y to 5.27 MMT.
Recent demand for Brazil's ethanol supplies has strengthened after Brazil's Trade Ministry reported Thursday that Brazil Jan ethanol exports surged. Brazil Jan ethanol exports surged 155% y/y to 200 mln liters. The strong demand for Brazil's ethanol supplies may prompt Brazil's sugar mills to divert more cane-crushing toward ethanol production rather than sugar production, thus reducing sugar supplies.
There was a market chat of potential bottlenecks in Brazil for new-crop sugar shipments as the harvest of a record soy harvest has been delayed and ports will face a very large vessel line-up from March onwards.
However the sweetener had its slippages on Tuesday and Wednesday, as the Indian Sugar Mills Association (ISMA) reported on Tuesday that India's Oct-Jan sugar production climbed 25% y/y to 17.68 MMT.
Also, White sugar futures on ICE closed slightly lower on Wednesday, easing back after reaching a near four-year peak in the prior session.
Early in the week, NY sugar met with the lows of 15.78 cents/lb. However that was brief amid the news of supply squeeze due low production concerns in Thailand and the EU.
Amidst all however, CFTC reports point towards the 4th straight week of slide in the net longs for the week ended 2nd February. Net longs dropped by 9,304 contracts to 197,183 contracts. It is to be noted that there was a 4th consecutive weekly drop on the longside. This week the short side also slipped by almost 1,200 contracts too, this week. The open interest was registered at 13,18,432 contracts vs 13,02,327 contracts.
Thus, support and resistance for Sugar #11 lies at 15.70 cents and 17.05 cents per lb, respectively.
0 Comments 
Post Comment 
