Raw sugar prices posted moderate gains on Thursday, with NY sugar rising to a 1-month high and London sugar rising to a 1 1/2-month high. Thursday’s rebound in crude oil prices to a 1-week high was bullish for sugar.
Strength in crude oil prices benefits ethanol prices and could lead global sugar mills to divert more cane crushing to ethanol production than sugar, thereby reducing sugar supply.
The raw sugar contract due in May increased by 0.33 cents, or 1.5%, to 22.52 cents per pound. In turn, the white sugar contract expiring in May rose 1.1%, to US$652.50 per ton.
Traders told Reuters that recent rains appear to have improved the outlook for Brazil’s 2024/25 sugarcane harvest, although some concerns about dry conditions remain. Rabobank, in a report, said Brazil could have a strong early harvest, which could be bearish in the short term, but harvested cane volumes could disappoint later in the year.
Sugar has also had transitional support since Monday, when US sugar producers called for a reduction in sugar imports from Mexico. The American Sugar Coalition has called on the US government to reduce the amount of sugar Mexico can send to the US by 44%, which would likely increase prices and require the US to buy sugar from other countries, taking advantage of already scarce supplies. global sugar industry.
Reduced sugar production in India continues to be a driver for prices. The Indian Sugar Mills Association (ISMA) reported last Monday that India’s sugar production in 2023/24, from October to March 15, fell -0.7% y/y to 28.1 million of t.
There were no negotiations on Friday due to the Good Friday holiday.
With information from Barchart and Reuters
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