By Marcelo Teixeira
NEW YORK, Aug 6 (Reuters) – Speculators are on the way in which to growing their already giant lengthy place in uncooked sugar futures on ICE alternate, spurred by post-frost downgrades to Brazilian manufacturing, a transfer that would take costs to as excessive as 21 cents per pound.
In line with a report by European sugar consultancy CovrigAnalytics launched on Friday, sugar market gamers proceed to revise down their estimates for output in Brazil, the world’s largest exporter with 40% of the market, believing the tough drought and frosts will harm cane agricultural yields.
“Quick time period the bulls have gained momentum sustained by the frost episodes in Brazil and by steady cuts in sugarcane manufacturing estimates,” the analyst stated.
“They are going to most likely handle shortly to interrupt above the 19 cents/lb threshold and transfer larger even as much as 20.5-21 cents/lb,” it added, saying manufacturing numbers from Brazil’s business group Unica for second half of July and August may add gasoline to the hearth in the event that they present a “big” drop in agricultural yields.
Sugar costs hit 18.92 cents/lb on Friday, the very best since February once they have been at a four-year peak. SBc1SOF/L
CovrigAnalytics stated that if Brazil sugar manufacturing drops to a worst case situation round 30.eight million tonnes it might drive the worldwide sugar provide steadiness to a deficit of as much as 4.6 million tonnes in 2021/22.
The consultancy believes costs may see some downward correction within the medium time period, nevertheless, when new manufacturing from India and Thailand begins to hit the market in 2022.
(Reporting by Marcelo Teixeira; Modifying by Kirsten Donovan)
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