MUMBAI (Commoditiescontrol) - Raw and white sugar futures ended lower on Intercontinental Exchange (ICE) on Friday, while sugar futures also posted a weekly loss due to the estimated surplus sugar supply in coming season.
On Friday, ICE October raw sugar ended down 0.07 cents, or 0.50 percent, at 13.98 cents per pound, while most active March contract also closed off 0.09 cents, or 0.61 percent, at 14.64 cents.
October raw sugar futures also lost almost 4 percent during a week, while benchmark March contract also fell by 3.5 percent. Raw sugar futures majorly declined over the increased supplies from Brazilian producers to hedge their produce on New York futures Exchange. While speculators have decreased their positions, majorly from October contract ahead of its expiry on next Friday. The total open interest has dropped by 78,617 lots to 85,811 contracts in the week to September 21. On other hand, traders also rolled over their positions to March raw sugar contract from October, as the open interest of March rose by 18,959 lots to 381,332 lots.
Raw sugar futures may see further fall and may hit 10-year low during coming season, according to the Australia's research organization ABARES. ABARES also predicted that, raw sugar prices may trade at an average price of 13 cents on ICE US Exchange, during next sugar season 2017-18 (October to September), due to estimated excess sugar supply of 5.8 million tonnes. With improved sugar production in European Union, India, Thailand, Pakistan, Russia and other sugar producing countries.
While, Brazil, the world's largest sugar producers, also having favourable weather conditions for sugarcane growth and harvesting, as per the Metrology department. The rains are expected in the entire Central-South region in October month, will also good for sugarcane after long dried weather in Brazil. Central-South region contributes 90 percent cane of the country.
On other hand, London December white sugar settled down $2, or 0.54 percent, at $368.10 per tonne on Friday. While December futures were also dropped by 4 percent in the week. London sugar futures remained under pressure over the estimated higher supply of sugar in white form, as world's major sugar importer, the European Union expected to have bumper sugar production in coming season, as after European Union has decided to abolish the quota regime from 1st of October 2017, with effect of a removal for production quotas.
The EU is estimated to produce more than 20 million tonnes of sweetener in 2017-18, against the consumption of 19 million tonnes. So bloc can become a net sugar exporter from a net sugar importer earlier. Additionally, white sugar supply is also expected exceed from other producers like, India, Thailand, Pakistan and Russia etc.
However, due to estimated excess supply of refined sugar, the white premium has declined upto 2 1/2 year low in last week, below $50 per tonne. While, on Friday, October-December whites-over-raws sugar premium was at $60 a tonne on Friday.
The white premium is the difference between refined and raw sugar futures.
Morever, with lesser white premium, sugar refineries can not match the cost of refining and processing costs, so refineries also not buying raw sugar due to lesser returns.
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(By Commoditiescontrol Bureau: +91-22-40015532)
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