Forexpros – Sugar futures were higher on Thursday, as the previous day’s steep decline to the lowest level since May created bargain buying opportunities for investors, though further downside was seen on the view that global supplies are more than ample to meet demand.
On the ICE Futures U.S. Exchange, sugar futures for May delivery traded at USD0.2241 a pound during European afternoon trade, adding 0.4%.
It earlier rose by as much as 1.1% to trade at a session high of USD0.2271 a pound. Prices fell to as low as USD0.2228 a pound on Wednesday, the lowest since May 26. Prices are down almost 40% since hitting a three-decade high in February of last year.
Sugar prices have been under pressure in recent weeks, losing nearly 13% since March 20, as increasing competition for U.S. exports and ample global supplies have been dominating sentiment.
Those concerns intensified on Wednesday after India said it will consider allowing domestic mills to export an additional 1 million metric tons of the sweetener next week to ease a domestic surplus.
Fresh exports are being considered because of a domestic surplus and to allow mills to raise cash to pay cane growers.
A panel of ministers headed by Finance Minister Pranab Mukherjee will discuss the proposal on April 25, Food Minister K.V. Thomas said earlier.
The government has already authorized shipments of 3 million tons in the current marketing season that began October 1 after production exceeded domestic demand for a second year.
Sugar output in India climbed 13% to 24.6 million tons in the October 1 to April 15 period, the Indian Sugar Mills Association said Wednesday.
Prices tumbled earlier in the week as broader market risk aversion and upbeat prospects over Brazil’s upcoming sugar harvest weighed on the sweetener.
Last week, Brazil’s sugar industry association, Unica, projected that the nation’s center-south crop would yield 33.1 million tonnes of sugar in the upcoming 2012-13 season, up 5.7% from a year earlier.
The agency pegged the centre-south cane crush at 509 million tonnes.
Crops in the Brazil’s center-south region produce nearly 90% of the nation’s sugar and ethanol.
The Unica forecast came after Brazil’s government crop agency Conab estimated that the country’s sugar production would rise to 38.9 million tonnes in the 2012-13 marketing year.
Sugar traders have been monitoring sugar cane crop conditions in Brazil in recent weeks, as the upcoming cane harvest in center-south region is due to begin in early May.
Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
Elsewhere on the ICE Futures Exchange, cotton futures for May delivery eased up 0.15% to trade at USD0.9208 a pound, while Arabica coffee for July delivery rose 0.85% to trade at USD1.7628 a pound.
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