MUMBAI (Commoditiescontrol) - Raw sugar futures hit nearly six month high on Friday, amid weak dollar and higher oil prices in international market. While white sugar futures also ended firm on Intercontinental Exchange (ICE).
Raw and white sugar futures also raised 0.52% and 0.87% during a trading week, respectively.
On Friday, ICE March raw sugar settled up 0.17 cents, or 1.11%, at 15.45 cents per pound, after hitting 15.49 cents, a highest level since May 27, while London March white sugar contract also finished up $2.30, or 0.58%, at $ 397.10 per tonne on ICE Europe Exchange.
On other hand, white premium remained lower in spot, white premium is the price difference between refined and raw sugar traded at an average rate of $57 per tonne during the week.
ICE sugar futures were traded firm in recent week, over increased international oil prices. While sweetener futures also supported with the weak dollar.
International oil prices hit the new high in current month, as U.S. WTI Crude Oil hit a two-year highs at $58.95 per barrel, while Brent crude oil touched $64.41 a barrel, the highest level since June 2015.
Brent crude oil prices jumped up due to political tensions in Saudi Arabia in early November, while WTI Crude oil raised as Keystone pipeline shutdowns, its Canadian pipeline imports into the United States.
The Organization of the Petroleum Exporting Countries (OPEC), non-member Russia and nine other producers are expected to extend the supply cut after March 2018 in OPEC meets on November 30, which also raised the oil prices.
With higher international fuel prices, Petróleo Brasileiro SA (PBR), (Petrobras) a Brazilian state-run energy company also increased the gasoline prices during a previous week.
Although, the higher gasoline prices in Brazil, promoted millers to divert higher amount of sugarcane to produce ethanol due to better returns and higher biofuel demand in domestic market. As the ethanol is a major alternative to fossil fuels.
The gasoline prices has seen 20% hike since a August month in current year.
According to a survey, by S&P Global Platts, sugarcane crushing during first 15 day of November month has estimated to be rise by 3.2% to 224.6 lakh tonnes, from last season for the corresponding period.
While sugar output is expected to decline at 12.28 lakh tonnes during 1H of November, about 10.2% lesser from previous year. Sugar production majorly decreased due to lower production mix during the period, as per the survey. The sugar mix is estimated at 41.32% durinh first half of November month, which is much lesser against the previous season's 47.96% during same period.
On other hand, appreciated Brazilian currency also helped the rally of raw sugar futures in current week. The US dollar slipped nearly 1% against Brazilian currency in a week. The downfall in the greenback has dropped at two month low over weak U.S. federal data.
Meanwhile, global sugar market saw a handsome rally over supportive fundamentals in recent week. But according to overall scenario sweetener prices may not sustain at the current level for long and expected to follow the earlier bearish trend, due to estimated global surplus sugar supply during the current season 2017-18 (October to September).
However, with excess supply of commodity, the sweetener prices may remained under pressure.
(By Commoditiescontrol Bureau: +91-22-40015532)