MUMBAI (Commoditiescontrol) - Raw and white sugar futures rebounded on Intercontinental Exchange (ICE) on Friday over short-covering , but raw sweetener futures lost 1.7%, while white sugar increased 1%.
On Friday, ICE March raw sugar ended up 0.15 cents, or 1.05%, at 14.38 cents per pound, while December white sugar closed up $10.30, or 2.75%, at $385.10 per tonne on ICE Europe .
On other hand, raw sugar futures dropped up to 1.71% during a week, whereas white sugar futures also fell about 1.05% week on week. Besides that, sugar futures witnessed a handsome gain during a week, as raw sugar futures hit a 14.84 cents high on Wednesday, a highest level since August 04. Meanwhile, white sugar futures also rose more than a month high at $387.50 on same day.
The recent rally in sweetener futures were adherence to positive sentiments due to various factors like rise in international oil prices, weak dollar and unfavourable weather conditions of Brazil. In last week international oil prices rose over OPEC-led decision to extend a production cut. Although, demand for the gasoline substitutes expected to rise. However, Brazilian mills would favour ethanol production over sugar.
On other hand, recent rainfall also hampered the sugarcane harvest in North-North East Brazil region, which also helped raw sugar futures rise in a week.
Moreover, the rally in sweetener futures had slowed down on Thursday due to the higher hedging by the Brazilian producers against the recent rise in raw futures. While white sugar futures prices also dampened as expected enough supplies during a season.
December white sugar futures prices seen a recent hike over expected shortfall in front month delivery as the European Union sugar will be available in next year only, while estimated supplies from Thailand, Pakistan and other white sugar producers will cover the gap for next month delivery. But still the white sugar premium between December contract and March white sugar contract widen up to $7.60 on Friday.
The European Union producers started hedging their produce against the March contract. However, the open interests in March contract has risen against the front month contract. The European Union is estimated to produce about 200 lakh tonnes of sugar in current season, sugar production is expected to increase after the removal of quota regime.
On other hand, December/March white premium, or the price difference between the white and raw sugar slightly recovered in last session and traded at $68 per tonne in spot. The hike in white premium will improve the raw sugar demand from refineries.
However, international sugar futures prices may see slight rise during next week also, while price difference between front white sugar December contract and most active March contract may also increase. On other hand, rise of white premium will also lead a rally in March raw sugar futures prices.
But still international sugar futures will remain under pressure of estimated higher sugar surplus production in current season.
According to Green pool, a commodity specialists, world sugar production is expected to increase to 1930.5 lakh tonnes during 2017-18 (Oct-Sept), against the consumption of 1822.6 lakh tonnes. And global sugar surplus is estimated at 98 lakh tonnes.
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(By Commoditiescontrol Bureau: +91-22-40015532)
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