Raw sugar prices edged lower on Tuesday and had a surprisingly muted response to India’s Food Minister’s statement that the country has “no plan” to cut import duties on the sweetener in the near term.
The commodity’s muted reaction was likely due to the fact that market participants largely expected the decision to leave import duties following the recent update on domestic sugar market fundamentals. Last week, the Indian Sugar Mills Association cut estimates for sugar output this season but said there was “no need” for imports.
Sugar trade has been volatile, recently, as traders tinued to adjust their positions according to the latest market developments out of India. Overall; however, downside pressures are winning and causing a wind down in prices following last year’s aggressive rally. Sugar futures rallied almost 30% in 2016. According to the Commodities Futures Trading Commission Commitment of Traders report, money managers cut their net long positions in raw-sugar futures and options by 14% in the week ended February 28, the most since November.
In 2016 and early 2017 there was the expectation that India, the world’s largest sugar consumer, would have to import sugar to satisfy domestic demand due to lower domestic availability after a drought impacted the country’s crop. Earlier this month, the ISMA said India will produce 20.3 million tonnes of sugar in the year to September 2017, down 5% year-over-year.
On Tuesday, raw sugar futures for May delivery declined 0.4% to 18.14 cents per lb. While technical selling pressures remain, the commodity is finding support at 18.00 cents per lb. This could have contributed to Tuesday’s muted response to India’s import decision.
Source: Economic Calendar