Mumbai (Commodities Control) – After a chunky price rise a week prior, NY sugar ended 0.38% lower for the week ended 9th February. It is to be noted that the active May contract on ICE futures went southward after peaking around 16.12 cents per lb this week.
The drop in price of ICE raw sugar is primarily attributed to projection of global sugar surplus in the 2021-22 sugar season along with waning speculators interest.
Raw sugar futures on ICE closed down on Friday, extending a retreat from a near four-year peak set earlier in the week while white sugar also fell with the spot contract expiring and traders reporting a large delivery.
It is to be noted that Sugar#11 ended 3.73% higher for the week ended 5th February. The rally last week was primarily supported by global supplies concerns and strength in crude oil prices.
Sugar prices declined after Citigroup on Friday said that it sees sugar prices falling from current levels to 14-15 cents per pound on the outlook for a global sugar surplus. Citigroup is forecasting a global 2021/22 sugar surplus of 5.0 MMT compared with a 2.0 MMT deficit in 2020/21.
March raw sugar fell 0.17 cent, or 1.2%, to 16.38 cents per lb. The front month had peaked at 17.05 cents on Wednesday, its highest level since April 2017.March white sugar expired on Friday at $469.60 a tonne, $0.40 down.
Speculators reduced their long position in raw sugar, according to the CFTC. The weekly report points towards the 5th straight week of slide in the net longs for the week ended 9th February. Net longs dropped by 2,931 contracts to 194,252 contracts. It is to be noted that there was a 5th consecutive weekly drop on the longside of 1,991 contracts, while the short side gained by 940 contracts. The open interest was registered at 13,55,888 contracts vs 13,18,432 contracts last week.
Meanwhile it is to be noted that during the week, volumes had been boosted by index funds rolling positions out of the March contract, which expires on Feb. 26, into May.
U.S. sugar stocks-to-use ratio, a key indicator to evaluate supply and demand, jumped for the second consecutive month and reached 16.1% on Tuesday, the USDA said.
Sugar prices were already on the defensive from Thursday's news of higher sugar production from India. The India Sugar Trade Association on Thursday forecast that 2020/21 India sugar production will increase 9% y/y to 29.9 MMT. Last Tuesday, the Indian Sugar Mills Association (ISMA) reported that India Oct-Jan sugar production was already up 25% y/y to 17.68 MMT.
Early this week, Tropical Research Services projected a global 2021/22 sugar surplus of 5.2 MMT on the prospects for sugar production to recover in Thailand and India. TRS predicts that Thailand's 2021/22 sugar production may rebound to 10 MMT from 7.2 MMT in 2020/21 and that India's 2021/22 sugar production may climb to a record 35.6 MMT from 31 MMT in 2020/21.
Having said so, dealers note that the market was underpinned by India's struggle to export excess stocks, which had contributed to short-term tightness in the physical market.
According to Sugar trader body All India Sugar Trade Association (AISTA) that sugar scenario is favourable for India’s export as international price rise has reduced the disparity to almost zero. But India's sugar exports are likely to drop due to logistic and payment issues.
India’s export may drop over 24% to around 43 lakh tonnes in the current marketing season 2020-21. Sugar mills exported 57 lakh tonnes of sugar against the mandatory quota of 60 lakh tonnes set for the 2019-20 season (October-September). AISTA said its crop committee, which reviewed the country's sugar production for this year, has reported export of sugar in the current season to be around 43 lakh tonne. The exports are likely to be less than last year due to the logistics constraints.
Experts observe that in the current scenario, an uptrend can be expected only if the market rises above the resistance level of 16.50 cents, which will be followed by moving up to resistance level 17.15 cents and 18 cents per lb.
Meanwhile, support and resistance for Sugar #11 lies at 15.33 and 15.99 cents per lb, respectively.
0 Comments 
Post Comment 
