Raw sugar futures on ICE rallied above 11 cents on Wednesday, spurred by signs of tightness in white sugar supply and a rise in oil prices as easing coronavirus pandemic-related lockdown restrictions revive fuel demand. July raw sugar settled up 3.1%, at 11.19 cents per lb, the highest since late March. Dealers said sugar would be underpinned for as long as crude remains firm, with some talk it only needs to improve by $4-5 for ethanol to become competitive with gasoline in Brazil. Rising energy prices can prompt cane mills in Brazil to produce more cane-based ethanol fuel over sugar. (Reuters)
Rabobank said that risks to planting and harvesting, as well as logistics risks due to the coronavirus were unlikely to have been factored into the current sugar futures prices and could eventually help push sugar prices up. A trader at Sucden added that the recovery in energy prices was helping lift the ceiling on sugar prices, as well as making ethanol production more profitable. In its monthly report, Conab forecast that the strong pace of sugar exports would help mitigate a fall in domestic sugar prices as the harvest picks up. Meanwhile, a survey by Cepea/Esalq showed that exmill hydrous prices remained firm as mills seem to be holding on to their stocks. (ECRUU)
· Uncertainty over Chinese import policy – Msweet - Domestic futures broke upwards through the CNY 5,000/mt (USD 704/mt) psychological level amid a resurgence in demand, according to analysts. However, they point out that the sentiment is overall bearish given that the import duties on sugar will return to pre-antidumping measures in the next few days. There remains a lot of uncertainty over the quantity of imports.