Mumbai (Commodities Control) - NY Sugar managed to rise 1.67% or 25 points for the week ended 20th November. This, despite sugar prices falling to 1-week lows on Friday due to weakness in the Brazilian real.
Through the week, the sweetener was primarily supported by technical buying and signs that the market is growing tighter amid failing crops.
On Friday however, March raw sugar was down 0.07 cent at 15.21 cents per lb. The front month had peaked at 15.66 cents on Tuesday, its highest since mid-February. March white sugar fell $1.40 at $413.30 a tonne. The Brazilian real on Friday dropped 1.29% against the dollar to a 3-session low.
Sugar prices were already on the defensive after the USDA's Foreign Agricultural Service (FAS) on Thursday forecasted that India's 2020/21 sugar production will climb 16.8 % y/y to 33.76 MMT and that India's sugar exports will climb 3.5% to 6.0 MMT.
Having said so, Sugar #11 had a wider range of bullish factors to avoid the prices from slipping into red at the end of the week.
Technically for the week ended 17th November, net longs in managed money bounced back after two consecutive weeks of fall. According to the CFTC data, the net longs were registered at 252,922 contacts, up 7,234 contracts from last week. This was the result of simultaneous addition to the long side and reduction in shorts. The open interest was reported at 12,62,183 contracts, up 27,582.
Sugar prices surged at the week’s beginning as Hurricane Iota on Monday slammed into Central America, bringing heavy rain and potential damage to sugar crops in Nicaragua, Honduras, and Guatemala.
Thus, sugar prices on Tuesday rallied to 9-month highs, during the early session. Dealers said the market continues to watch for potential damages to Central America cane fields, as well as any signal of a new export policy in India.
"The past few days have seen several forecasters make hefty cuts to their estimates of EU sugar production. The news flow continues to support a rally," Commonwealth Bank of Australia analyst Tobin Gorey said.
Sugar prices saw support after the International Sugar Organization (ISO) on Tuesday raised its global 2020/21 sugar deficit estimate to 3.5 MMT from an August forecast of 0.7 MMT.
The ISO cut its global 2020/21 sugar production estimate and increased its global 2020/21 sugar deficit estimate. ISO projects that global 2020/21 sugar production will increase by 0.9% y/y to 171.1 MMT. ISO also said the global 2020/21 sugar market would fall into deficit by 3.5 MT from a 1.86 MMT surplus in 2019/20.
France's Agricultural Ministry on Monday cut its 2020 French sugar-beet production estimate to a 19-year low of 27.2 MMT from an Oct estimate of 30.5 MMT due to drought. France is the largest sugar producer in the European Union.
Speculation about the level of the Indian government’s export subsidy is also fuelling market concerns," ABN AMRO analyst Casper Burgering said in a note.
Ukrainian sugar refineries have produced 731,000 tonnes of white sugar from 5.54 million tonnes of sugar beet so far in the 2020-2021 harvest year, which began on Sept. 1, the Ukrtsukor national sugar union said on Wednesday.
The union has previously predicted that output of white sugar will fall by 15% in the full year to around 1.2 million tonnes.
French sugar and ethanol maker Tereos on Wednesday reported a net loss in the first half of 2020/21, while the group's core earnings more than doubled, helped by a rise in European sugar prices, larger sales in Brazil, and a strong alcohol market.
Tereos, the world's second-largest sugar producer by volume, has been grappling with low prices after the end of European sugar quotas in 2017 but earnings have been improving as prices rebounded.
Anton Kolhanov of Kolhanov.com observes in his monthly forecast that the uptrend may be expected to continue reaching resistance levels of 16.50, and 18.00 cents per lb eventually. Although he cautions about the new Covid wave, in his fundamental analysis.
Immediate Support and Resistance for Sugar #11 lies at 14.63 cents and 15.69 cents per lb, respectively.
(Commodities Control Bureau)
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