FX.co ★ Sugar Holds at Narrow Range

In January, sugar futures in the United States hovered around the 15 cents per pound mark, maintaining a narrow range since mid-November and reflecting a significant decrease from the prior year's levels due to anticipated abundant supply. Industry analysts highlight that the global sugar market is expected to experience a surplus exceeding 2 million tonnes in the current marketing year. This anticipated surplus is largely attributed to robust production out of India, the world's second-largest producer, where mills secured export contracts for 180,000 tonnes as substantial yields suppressed local prices. Meanwhile, production in Brazil is projected to diminish slightly compared to the previous marketing year. This is primarily because elevated fuel prices have prompted Brazilian producers to allocate their crops towards more lucrative ethanol blending operations rather than traditional sugar milling. Additionally, the appreciation of the Brazilian real has exerted upward pressure on prices, counterbalancing the downturn of the Indian rupee.