Raw sugar futures hit two-week high as Brazilian selling eases and oil prices climb
Raw sugar futures hit a two-week high, supported by reduced Brazil selling and rising crude oil prices. Stronger energy markets are boosting ethanol demand, prompting mills to divert cane from sugar, tightening supply. Policy moves in Brazil and higher fuel prices are adding further bullish momentum.
Raw sugar futures on the ICE exchange rose to their highest level in more than two weeks on Monday, supported by a pullback in selling from top producer Brazil and a rally in crude oil prices driven by stalled United States-Iran peace negotiations, Business Rrecorder reported.
Raw sugar climbed 1.4 per cent to 14.12 cents per pound during the session, having touched 14.15 cents per pound earlier — the highest point since April 9. The contract had already gained 4.6 per cent the previous week. Broker and consultant Michael McDougall said it appeared that origin selling had run its course and that sellers were now holding out for higher price levels.
The rally in oil prices added further support to sugar, as elevated energy prices tend to encourage Brazilian cane mills to divert more cane towards ethanol production rather than sugar, tightening the sweetener’s supply outlook.
Two developments reinforced the bullish case for ethanol in Brazil. Brazilian state-run oil company Petrobras announced it would raise the average price of jet fuel sold to distributors by 18 per cent from May 1, according to local newspaper Valor Economico. Separately, the Brazilian government said last week that a proposal to raise the mandatory ethanol blending ratio in petrol from 30 per cent to 32 per cent would be placed before the country’s energy council for evaluation the following week.
White sugar also advanced, rising 0.6 per cent to USD 437.70 per metric tonne on the day.
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Source : ChiniMandi
