Morning Sugar - With Tightening Fresh Supply From Brazil, More Up Short-Term
Take a Free Trial of our Daily Comments, Weekly Market Letter and more! Subscribe today or Learn More
Sugar prices have been pressured by bearish near-term demand fears. However, a positive turnaround in global risk sentiment and key outside markets can help sugar find its footing. Brazil's Petrobras cut their domestic gasoline prices, which was a significant source of pressure on the sugar market as that is likely to diminish near-term Brazilian ethanol demand. Center-South domestic ethanol sales have been running behind last year's pace since August, so their price reduction may reflect more than state-run Petrobras attempting to ease Brazilian domestic inflation concerns. Both energy prices and the Brazilian currency posted sizable gains after sugar's close, and that should provide early carryover support.
After sugar's close, however, crude oil and RBOB gasoline prices rallied up into positive territory which may provide the sugar market with support. This season's Indian sugar production is running slightly ahead of last season's pace which also weighed on sugar prices. India's mills have already contracted to export 3.8 million tonnes of sugar this season without a government subsidy. With Brazil likely to fall well short of last year's export total, India could end up exporting close to 6 million tonnes of sugar this season.
TODAY'S MARKET IDEAS
If global risk sentiment continues to mend, sugar prices can regain upside momentum. Near-term support for March sugar is 19.35 and 19.18, with resistance 19.70 and 19.99.
