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Informist, Tuesday, Aug 27, 2024

MUMBAI – The global sugar market is on the downtrend in anticipation of an increase in output by 2% during the current global marketing year 2023-24 (May-Apr), despite concerns about adverse weather in Brazil, Kedia Advisory said in a report. An increase in output in India and Thailand, two key producers, is offsetting weather-related concerns in Brazil, it said.

Although dry weather and fires in Brazil's sugar-producing regions might cause temporary price support due to short covering, the overall impact is expected to be minimal, according to the report. The US Department of Agriculture forecasts a 2.5 mln tn increase in global sugar production, bringing the total to 186 mln tn.

The outlook for the sugar market has turned bearish due to increased production and easing supply concerns, leading to a shift in market sentiment, it said. The bearish trend is reinforced by money managers raising their short positions. Data from the Commodity Futures Trading Commission indicates that net shorts in raw sugar futures on the Intercontinental Exchange have grown significantly, highlighting declining market confidence, it said.

BMI Research firm has revised its average price forecast for ICE-listed sugar futures downward from 20.8 cents to 19.6 cents per pound for 2024. The price reduction follows substantial price drops observed during the first half of the year, reflecting increased supply and easing crude oil prices, the report said.

While consumption is expected to reach a new record high, exports may decline due to reduced shipments from key producers like Brazil, India, and Thailand, it said. India's export policy for the 2024-25 season remains undecided. "Should the government continue with export restrictions, global sugar prices could find some support, providing a floor amidst otherwise bearish market conditions," Amit Gupta, research analyst at Kedia Advisory. 

At 1837 IST, sugar prices on the Intercontinental Exchange were up 0.7% at 19.18 cents per pound.  End

US$1 = 83.92 rupees

Reported by Taniva Singha Roy

Edited by Saji George Titus

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