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India Sugar: Up in north; ICE at 2-month high on India output worries

Informist, Wednesday, Aug 30, 2023

 

By Afra Abubacker

 

MUMBAI – In key markets of north India, ex-mill prices of sugar rose slightly today, while in Maharashtra, prices were unavailable as markets were shut on account of Raksha Bandhan, said dealers.

 

"Prices rose slightly today as there is no selling pressure for mills…it is only the start of the month," said Naresh Gupta, an Uttar Pradesh-based dealer.

 

On Tuesday, the government set the limit for sale of sugar by mills at 2.50 mln tn for September, down 50,000 tn from the quota for the previous month.

 

Market players had expected the September sales quota along the same lines as August. "Seeing the past trend, market expects September sales quota to be set around 2.5 mln tn," Gupta had said on Tuesday.

 

"Markets are shut today in Maharashtra because of Raksha Bandhan. They will reopen on Thursday," said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association.

 

Following are highlights of the sugar trade in the domestic market today:

–Prices unavailable in Mumbai

–Prices unavailable in Kolhapur

–Up 10-15 rupees at 3,690-3,740 rupees per 100 kg in Muzaffarnagar

–Up 10-15 rupees at 3,710-3,790 rupees per 100 kg, in Kanpur

 

At 1457 IST, the October sugar contract on the Intercontinental Exchange was at 25.67 cents per pound, up 1% from the previous close. Earlier in the day, the contract hit a two-month high of 25.78 cents.

 

Prices were up due to concerns over sugar supply from India because of deficient rains and shortfall in production. According to ISMA, sugar output in 2023-24 (Oct-Sep) is estimated at 31.7 mln tn, down 3.4% from 32.8 mln tn in the ongoing season.

 

Reports of possible export restrictions from India also aided the upside in prices. India is the second-largest producer and exporter of sugar, after Brazil. India has allowed sugar exports of 6.1 mln tn for the current season ending Sep 30. Exports of the sweetener were at a record 11.1 mln tn last year.

 

"Citi Bank believes raw sugar prices at ICE exchange will stay elevated for a longer period, possibly testing fresh highs, mainly due to expected production difficulties in Asia and the possible ban on exports from India," said Kedia Comtrade.

 

"The bank expects money managers to increase positioning in raw sugar futures on ICE in coming weeks and see the possibility of prices testing higher levels around 27-30 cents in the last quarter of the year," Kedia said.

 

Concerns over disruption in sugarcane harvest due to forecasts of rains in Brazil also aided the upside.  End

 

Edited by Ashish Shirke

 

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