Mumbai, 16 Oct (Commoditiescontrol): Sugar prices further strengthened during the week ended Oct 13th, as fears of tighter supplies led a fresh boute of short covering among traders.
ICE raw sugar futures settled higher on Friday, drawing support from concerns that an El Nino weather event will curb production in major Asian producers including India and Thailand. Further, the rally in crude oil price stoke the fear of the world's sugar mills diverting more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
However, the gains were restricted by robust Brazil sugar output during the second half of last month. Brazilian mills produced 3.36 million tons of sugar in the second half of September, nearly double the amount seen this time last year and above analysts' expectations.
ICE sugar futures for March delivery settled up 0.68 cents, or 2.6% at 27.03 cents per lb. The contract added 1% this week, its second consecutive week of gains.
December London white sugar rose $16.10, or 2.3%, at $727.30 a tonne. The contract ended 2.55% higher this week.
Given the sharp downturn in Indian production in 2022/23, hopes of a strong rebound in 2023/24 have been curtailed, dealers said.
Meanwhile, the USDA cut again its projection for U.S. sugar production and said high-tier imports were record. The agriculture ministry in China, one of the world's top sugar consumers, kept its forecast for the country's 2023/24 sugar imports unchanged at 5 million tons. The figure compares with estimated imports of 3.8 million in 2022/23.
Last Thursday, the USDA's Foreign Agricultutral Service (FAS) projected 2023/24 Thailand sugar production at 9.4 MMT, down 15% on year.
Germany's refined sugar production in the new 2023/24 season is forecast to rise to about 4.36 million metric tons, up some 12.9% from last season.
The EU's sugar output is expected to rise 3% to 15.4 million metric tons in 2023/24 thanks to reduced beet acreage in France versus increased plantings in other member states, the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS) said.
India is expected to produce 33.6 million metric tons of white sugar in 2023/24 – a supply level that might not meet consumption needs, FAS said. India's government is set to restrict sugar exports after poor monsoon rains, broadcaster ET Now reported on Wednesday, citing agencies, a move widely expected by the market.
Speculators reduced their bullish bets in futures of raw sugar in the week to Oct 10, the data from from the Commodity Futures Trading Commission (CFTC) showed on Friday. Funds added 6,360 contracts to their net long position in raw sugar, taking it to 133,329 lots in the period.
Sugar output fears are once again playing out in the markets as fears of drought conditions in the growing region linger, forcing analysts to readjust their previous estimates and the availability of the sweetener during the busy season. There's one more element added recently was the escalation of violence in the middle east. Israel-Hamas hostility will added pressure on financial markets, which could mean more volatility in the near term.
As observed in the previous week, Sugar output fears continues to play out in the markets. Fears of drought conditions in the growing region is forcing analysts to readjust their previous production estimates and the availability of the sweetener during the busy season. There's one more element added recently was the escalation of violance in the middle east. Israel-Hamas hostality will adde pressure on financial markets, which could mean more volatility in the near term.
For Monday, support for the March Sugar contract is at 26.53 cents and 26.02 cents, with resistance at 27.36 cents and 27.68 cents.
(By Commoditiescontrol Bureau: 09820130172)
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