Mumbai, 18 Dec (Commoditiescontrol): Sugar continues to remain on sellers radar for obvious reasons, which include receding supply pressure and flip-flopping of policy by large producing countries such as India - have only added to market uncertainty. Apparently, the natural sweetener prices have come crashing down.
ICE raw sugar prices ended lower on Friday, falling near eight-and-half-month low, on fund selling, stronger dollar amid robust global output prospect. Hence, the natural sweetener posted another week of losses. Brazilian mills output continue to fuel funds selling.
The natural sweetener is overwhelmed by bearish factor following the improved global supply conditions. Recently, UNICA reported the 35% increase in Brazil's Centre-South region sugar output in late November. India, the world's second-largest sugar maker, is likely to produce 32.5 million tons of sugar in the 2023/24 marketing year that began on Oct. 1, an industry body said.
ICE sugar futures for March delivery settled 0.19 cent, or 0.9% lower at 21.99 cents per lb, after dipping to eight and a half month low of 21.16 cents on Thursday. The contract lost 5.8 for the week and is down nearly 20% in the last three weeks, posting their sixth straight week of losses. It may be remembered that the front month contract hit a 12-year high of 28.14 cents on Nov 7.
March London white sugar lost $3.80, or 0.6%, to $626.80 a ton. It ended the week 4.22% lower. A total of 262,750 metric tons of white sugar has been tendered against the December contract on ICE Futures Europe, exchange data showed on Thursday.
Meanwhile, India's government changing its stance on allowing some ethanol production from sugarcane juice, could aid restrict the fall in sugar prices, traders said.
Last week, India changed it's ethanol policy, in order to boost domestic sugar supplies, which contributed to the recent slide in prices along with stronger-than-expected production in Brazil.
Dealers said funds might be adding new short positions, not just liquidating their longs. They also noted an expected pickup in rains in top producer Brazil next week, which should be beneficial to next year's crop.
Green Pool Commodity Specialists said that India restricting sugarcane use for ethanol could add 2 MMT of sugar to domestic supplies. Conab, too, raised its 2023/24 Brazil sugar production estimate to 46.9 MMT from an August estimate of 40.9 MMT. As a result, the markets ended the previous week lower.
Meanwhile, a surge in EU imports of Ukrainian sugar is expected to continue for at least for another season, weighing on prices in the bloc.
The U.S. will import more sugar at higher tariff, the USDA projected on Friday, and the market sees the need for even higher imports.
Sugar prices have been on the decline, retreating from a 12-year high recorded last month, on increased supplies from Brazil. Brazil exported 3.68 million metric tons of sugar in November, 10% up year-on-year.
The International Sugar Organization (ISO) bearish outlook too impacted prices. The global sugar body has raised its 2023/24 global sugar production (Oct-Sep) estimate to 179.9 MMT from a previous estimate of 174.8 MMT and cut its 2023/24 global sugar deficit to -335,000 MT from a prior forecast of -2.1 MMT. Longer term, however, sugar is due an upward correction, dealers said, as the market is still expected to record a deficit this season.
Speculators reduced their bullish bets on futures of raw sugar on ICE U.S. significantly in the week to Dec. 12, according to Commodity Futures Trading Commission (CFTC) data on Friday. Speculators cut 52,024 lots off their long position in raw sugar and were holding a net long position of only 27,074 contracts by Dec. 12.
The latest Unica report suggest a pacy growth in Brazilian output that helped cut global deficit prospect. Though, drought conditions in the growing region such as Thailand remains a big challenge, which has incidentally forced analysts to readjust their production estimates and the availability of the sweetener during the busy season. Conversely, ample supplies from Brazil and India, should help ease supply constraint. Overall, the bullish price pattern remains unaltered though funds have decided to cut their long position. A clarity on production in necessary before taking a fresh bet.
For Monday, support for the March Sugar contract is at 21.63 cents and 21.27 cents, with resistance at 22.47 cents and 22.95 cents.
(By Commoditiescontrol Bureau: 09820130172)
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