Mumbai, 22 May (Commoditiescontrol): ICE sugar prices declined moderately on Tuesday as expectations of ample global supplies led to long liquidation. The July raw sugar contract dropped 0.12 cents, or 0.36%, closing at 18.56 cents per pound. This marked a continued downturn after rebounding from last week's 18-month low of 17.95 cents. The contract still ended last week with a 6% loss. In London, the August ICE white sugar contract fell $6.40, or 1.2%, to close at $544.40 per metric ton.
Dealers attributed the market's defensive stance to a strong start of the cane harvest in Centre-South Brazil, despite ongoing concerns about dry weather in the region. Wilmar, a leading sugar trader, suggested that China's sugar production might exceed the government's projection of 11 million tons due to expanded sugarcane acreage.
The bearish trend has been fueled by Brazil's robust sugar harvest. The sugar industry group UNICA reported that production in Centre-South Brazil reached 1.84 million tons in the latter half of April, an 84.25% increase from the same period last year, thanks to drier weather conditions.
Projections from StoneX and S&P Global Commodity Insights estimate Brazil's 2024/25 sugar production at 42.3 million tons, highlighting significant growth. Globally, production shifts are also impacting 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 recovering production 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 their bearish bets on ICE U.S. raw sugar futures. The Commodity Futures Trading Commission (CFTC) reported that funds raised their net short position by 13,919 lots to 58,274 in the week ending May 14.
Traders are monitoring these developments closely, with technical support for the July sugar contract seen at 18.39 and 18.23 cents, and resistance at 18.74 and 18.93 cents. Given the rising production in Brazil and shifting global supply dynamics, sugar prices are expected to remain volatile.
(By Commoditiescontrol Bureau: 09820130172)
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