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ICE Raw Sugar Prices Retreat From 2 ˝-Yr High On Brazil Output, Liquidation Pressure

14 Feb 2020 7:12 am
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Mumbai (Commodities Control) – ICE raw sugar futures fell on Thursday, slipping back slightly from the prior session's 2-1/2 year high, weakened partly by expectations the recent run-up in prices could boost production in Center-South Brazil.

Prices also fell on long liquidation pressure from commodity funds. Sugar futures have rallied sharply over the past month to a 2-3/4 year high on Wednesday as concern about future global supplies.

March raw sugar settled down 0.62 cent, or 4%, at 15.16 cents per lb. The front month rose to a 2-1/2 year high of 15.90 cents on Wednesday. While the active contract, May Contract, closed at 14.78 cents/lb, down 1.86%.

May white sugar settled down $11.40, or 4%, at $416.30 per tonne.

Dealers said the market may need to consolidate in the short term following its recent strong advance while there could also be some profit-taking in the run-up to the long holiday weekend. U.S. markets will be closed on Monday for Presidents Day.

At current high prices it may now be more profitable for mills in Center-South Brazil to shift to using more cane to make sugar rather than ethanol, dealers said.

Brazilian sugar and ethanol companies are likely entering their best season in a long time, with favorable weather boosting new-crop prospects and an all-time low local currency increasing returns on exports, analysts said.

Unica on Wednesday reported that Brazil's 2019/20 Center-South sugar production Oct-Jan rose +0.48% y/y to 26.485 MMT with the percentage of sugar cane crushed for sugar falling to 34.50% from 35.44% last year and the percentage of cane crushed for ethanol production rising to 65.50% from 64.56% last year. 

Dealers noted the open interest on the March contract, which expires on Friday, had fallen sharply and stood at 15,865 lots, as of Feb. 12, equating to 793,250 tonnes.

"It seems most of the 'game' has already been played out in London ahead of tomorrow's expiry," Sucden Financial senior trader Nick Penney said.

Support and Resistance for Sugar no 11 lies at 14.41 cents and 15.43 cents/lb, respectively.

(Commodities Control Bureau)


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