Mumbai, 24 Jun (Commoditiescontrol): This week, sugar futures experienced moderate losses as Brazilian sugarcan processing gathered pace helped by dry weather conditions. On the other hand, the adverse weather conditions in key producing regions such as India, Thailand helped limit losses. Yet, the natural sweetener concluded the week to June 21st lower and failed to carry foward the positive momentum experienced in the previous week. Below-average monsoon rainfall in India and ongoing dry weather in Brazil have sparked market volatility, impacting both production and market sentiment.
ICE sugar futures posted moderate gains on Friday, prompted by below-normal monsoon rainfall in India, leading to short covering. The Indian Meteorological Department reported only 64.5 mm of rain in the first 18 days of June, compared to the long-term average of 80.6 mm. The July raw sugar contract rose by 0.08 cents, or 0.42%, to close at 18.97 cents per pound, despite ending the week 2.4% lower. This followed a 2.26% gain the previous week, marking a return to a losing streak on a weekly basis. In London, the August ICE white sugar contract increased by $5.50, or 1%, settling at $558.20 per metric ton. Dealers noted that the market remains within its recent range of 18 to 20 cents per pound.
Concerns about dry weather in Brazil continue to threaten cane crops, while attention remains focused on India, where adequate monsoon rains are crucial for sugarcane development. Analysts emphasize that weather remains a significant driver of market sentiment, carrying substantial uncertainty.
In India, a 29% rainfall shortfall in 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 in key areas, adding to market uncertainty.
This past week, sugar prices have faced pressure from news of increased sugar output in Brazil. 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, Czarnikow (CZ), a trader and supply chain services company, forecasts a global sugar surplus of 5.5 million metric tons for the 2024/25 season (October-September) due to increased production in key regions. Conversely, Brazil's Copersucar, the world's largest sugar merchant, remains optimistic about mid-term sugar prices, suggesting that dry weather in the top producer could lead to smaller production for the 2024/25 season that started in April.
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 19.00 and 18.83 cents, with resistance expected at 19.28 and 19.39 cents.
The sugar market remains highly volatile, driven by significant weather-related uncertainties in major producing regions. While recent gains offer some optimism, the market's direction will largely depend on forthcoming weather patterns and production reports. Traders should stay vigilant and monitor key technical levels and industry developments closely.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
