Mumbai, 4 Jun (Commoditiescontrol): ICE sugar prices climbed to a 2.5-week high on Monday, driven by a weak dollar and short-covering. The July raw sugar contract rose by 0.48 cents, or 2.62%, closing at 18.78 cents per pound, though it had lost 0.6% the previous week. The August ICE white sugar contract in London increased by $10.60, or 1.96%, to settle at $552.30 per metric ton.
Market analysts noted that the slower-than-expected pace of sugar production in Centre-South Brazil during the first half of May provided some support. Additionally, sugarcane allocation for sugar production was smaller than anticipated in early May.
Brazil's sugar shipments have been robust, partly due to a strong start to the season and solid demand, with the number of vessels up around 40% compared to the same period last year.
Over the past nine weeks, sugar prices had declined due to enhanced global supply prospects driven by Brazil's increased production. On May 16, New York sugar prices hit a 1.5-year low, while London sugar reached a 1.25-year low amid expectations of ample global supplies. Although Brazil's sugar output currently exceeds last year's figures, market participants anticipate a weaker second half of the season.
The USDA projects a record sugar production of 186 million metric tons for the 2024/25 season, with demand expected to peak at 178.8 million tons. In France, 2023/24 white sugar production rose by 5.8% to 4.2 million metric tons, still 1% below the average of the previous four seasons.
Global production shifts are also influencing the market. Datagro forecasts a modest global surplus of 1.62 million metric tons for the 2024/25 season, reversing the previous season's deficit due to recovery in Thailand and increased output in China. Conversely, India’s sugar production decreased by 1.6% year-over-year as of April 30.
Speculators have increased bearish bets on ICE U.S. raw sugar futures. The CFTC reported that funds reduced their net short position by 1,362 lots to 68,128 in the week ending May 28, prompting an intensified short-covering rally.
Traders are closely monitoring these developments, with technical support for the July sugar contract at 18.38 and 17.97 cents, and resistance at 19.02 and 19.25 cents. Given the rising production in Brazil and evolving global supply dynamics, sugar prices are expected to remain volatile in the near term.
(By Commoditiescontrol Bureau: 09820130172)
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