Raw sugar up as oil prices rally
Raw sugar futures on Intercontinental Exchange rose on higher oil prices amid US–Iran tensions, as mills may shift cane to ethanol, tightening supply. However, ample global stocks and speculative selling capped gains, with markets remaining sensitive to weather risks, energy trends, and potential shifts in trader positions.
London: Raw sugar futures on the ICE exchange moved higher on Thursday, supported by rising oil prices as concerns grew over a possible escalation in the US-Israel conflict involving Iran. However, strong global sugar supplies prevented prices from reaching recent highs, Reuters reported.
Higher energy prices often lead sugar mills, especially in Brazil, to divert more sugarcane toward ethanol production instead of sugar. This shift can tighten sugar supply and push prices upward.
Raw sugar prices rose 1.2% to 15.74 cents per pound at 1313 GMT, after touching a five-month high of 15.91 cents earlier this week. Market sentiment remained cautious after Iran indicated it was reviewing a US proposal to end the conflict but ruled out negotiations, raising fears that tensions could continue.
Market analysts noted that sugar prices are currently under pressure due to comfortable supply levels and continued selling by speculators. However, they added that short-term price increases could still occur, as the market remains sensitive to weather conditions and changes in ethanol demand.
They also pointed out that a large number of traders are betting on falling prices. If the market moves against them, many may reverse their positions, which could further support prices.
Meanwhile, white sugar prices edged up 0.2% to $454.90 per tonne, after reaching a five-and-a-half-month high of $463.60 earlier in the week.
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Source : Chinimandi
