Mumbai (Commodities Control) - NY Sugar July futures posted a robust 7.5% or 116 points gain for the week ended 16th April, as the most-active contract settled at 16.57 cents per lb on Friday. Meanwhile the lead month (May'21) contract on ICE hit a six week high on Friday, nearing 17 cents per lb as demand for higher risk assets like the sweetener soared following upbeat economic data from China and the United States, and as supply worries lingered.
May raw sugar settled up 0.34 cents, or 2.1%, at 16.72 cents per lb. The contract was up 8.15% on the week. August white sugar settled up $6.90, or 1.5%, at $463.30 a tonne. Sugar #5 closed 7.02% or $30.40 higher for the week.
This is the second straight weekly gain for global sugar futures. Last week, NY sugar settled 5% or 75 points higher.
The sweetener witnessed a clear upside rally this week on the back of a more positive macroeconomic backdrop and worries that sugar production in Brazil will struggle to reach the previously predicted 36 million tonnes. This led to fund buying that propelled sugar prices higher this week.
Dry conditions may curb sugar yields in Brazil after Somar Meteorologia said that soil moisture in Brazil's sugarcane growing regions has been insufficient to provide good development of cane crops. Also, severe frost in France, the largest sugar producer in the EU, has damaged 10% of France's sugar beet crop, according to farmer group CGB.
Sugar also garnered support on Friday's projection from Green Pool Commodity Specialists that Thailand 2021/22 sugar production will only increase to 8.8 MMT from 7.57 MT in the current season, below USDA projections of 10.6 MMT due to limited expansion of planted sugar acreage in Thailand.
Meanwhile, dealers warned that the rally is largely sentiment-driven because the Brazilian harvest fears have been around for some time and the market has plenty of supply coming out of India.
In Fact during the latest week, sugar prices were undercut by news that India's sugar output in Oct-Apr 15 rose 17% y/y to 29.1 MMT from 24.83 MMT a year earlier due to a bumper crop and increased cane crushing.
However, in a supportive factor for sugar prices, the Indian Sugar Mills Association (ISMA) said that India's sugar mills had contracted only 4.5-4.6 MMT of sugar exports this year, below the government's export target of 6 MMT due to a shortage of shipping containers.
Not to forget, on the bearish side, Unica reported on Tuesday that Brazil's Center-South sugar production from Oct through Mar was up 43.7% y/y to 38.465 MMT. The percentage of cane used for sugar rose to 46.07% in 2020/21 from 34.33% in 2019/20. Also, researcher Datagro on March 10 projected that the global sugar market in 2021/22 would shift to a surplus of 1.1 MMT after a 2.6 MMT deficit in 2020/21.
Meanwhile, a total of 129,150 tonnes of white sugar has been tendered against the May contract on ICE Futures Europe, exchange data showed.
On the technical side, ICE raw sugar managed money net long position rose for the first time in seven weeks, by 16,285 contracts to 178,235 in the latest week to April 13, CFTC data showed. The rise in the net longs were the result of simultaneous rise in long position and reduced short position. The open interest rose by 13,666 contracts to 12,119,612 contracts.
Pakistan's (TCP) state agency has issued an international tender to purchase 50,000 tonnes of white sugar, European traders said.
Support and resistance for Sugar #11 (May’21) lies at 16.00 and 17.16 cents per lb, respectively. For Sugar #5 (August’21) the support and resistance lies at $449.77 and $471.17 per Tonne, respectively.
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