ICE sugar rebounds from 11-month low
Published: 04/07/2017, 5:17:02 PM
Raw sugar futures were higher Friday, continuing their rebound rally which started in the prior session following the commodity's plunge to an 11-month low, according to Economic Calendar.
Recently, raw sugar futures were up 1.5% at 16.77 cents per lb. On Thursday, the commodity surged, advancing as much as 4% as traders returned to the market following Wednesday's steep losses. On Wednesday, raw sugar futures bottomed at 16.05 cents per lb.
While technical buying interest was behind the rapid recovery, fundamental support came from the news that India will allow the import of 500,000 tonnes of raw sugar, duty-free. The imports were at the bottom end of the expected range of 500,000 to 1.5 million tonnes. However, the country may import more sugar later in the season. India has been trying to delay the imports as much as possible, even though it was widely expected to become a necessity.
The overall bearish tone to the sugar market remains due to an oversupply. Expectations for bumper yields from the Brazilian crop have pressured prices. Harvest season officially started in April, and the pace of sugar production has already been rapid thanks to good weather. Dry weather, which is good for harvest, is expected to continue through the month.
Furthermore, Brazilian sugar millers are likely to increase sugar production at the expense of ethanol. This trend is expected to last through the season and will provide a considerable amount of downside pressure on prices. In fact, with a robust supply situation many sugar analysts think that the only thing that could reverse the bearish pressure on the market is if Brazilian sugar millers suddenly decide to reverse the pattern, increasing their production of ethanol at the expense of sugar.