Mumbai, 27 Jun (Commoditiescontrol): ICE sugar futures recovered from early losses to settle moderately higher on news of a crop disease spreading through Uttar Pradesh, a key sugar-growing region in India. The July raw sugar contract gained 0.14 cents, or 0.73%, closing at 19.24 cents per pound, partially offsetting last week's 2.4% decline. The contract will expire on Friday, with dealer estimates for delivery ranging between 1.2-1.5 million tons. In London, the August ICE white sugar contract rose by $7.50, or 1.34%, settling at $569.20 per metric ton. Despite recent fluctuations, the market has remained within its range of 18 to 20 cents per pound.
Operations at the Tiplam terminal in Santos port resumed after a fire last Thursday temporarily halted sugar loading. Dealers noted that the market's response was within expected ranges.
Earlier in the week, New York sugar futures reached a one-week high, and London sugar hit a six-week high following India's announcement to maintain its sugar export restrictions. This move came after the Indian government confirmed no plans to review these restrictions.
Concerns about dry weather in Brazil continue to threaten cane crops, while India's monsoon rains, crucial for sugarcane development, remain a critical focus. A 29% rainfall deficit in India's central regions has impacted soybean, cotton, and sugarcane crops, leading to a 1.6% year-over-year decrease in sugar production as of April 30. Delayed monsoon rains could further disrupt planting schedules, adding to market uncertainty.
This past week, news of increased sugar output in Brazil exerted downward pressure on prices. Unica reported that Brazil's sugar production for the 2024/25 crop year through May was up 11.8% year-over-year at 7.837 million metric tons. Additionally, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 47.88% from 46.68% last year.
Looking ahead, trader and supply chain services company Czarnikow (CZ) forecasts a global sugar surplus of 5.5 million metric tons for the 2024/25 season (October-September), driven by increased production in key regions. Conversely, Copersucar, the world's largest sugar merchant, remains optimistic about mid-term sugar prices, suggesting that dry weather in Brazil could reduce production for the 2024/25 season.
In a notable industry development, BP has agreed to buy Bunge's 50% stake in the Brazilian sugar and ethanol joint venture BP Bunge Bioenergia for $1.4 billion, indicating significant investment interest in the sector.
Globally, the sugar market continues to experience volatility influenced by weather conditions in key production areas such as Brazil and India. Speculative traders have reduced their net short positions, leading to a short-covering rally. Traders are closely monitoring technical support levels for the October sugar contract at 19.31 and 19.11 cents, with resistance expected at 19.69 and 19.87 cents.
(By Commoditiescontrol Bureau: 09820130172)
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