Market Update: Raw Sugar Surges While Cocoa Declines Amid Production Challenges

Raw sugar futures rose 2.1% due to dry weather in Brazil and production declines in India. India forecasts sugar output at 26.4 million tons, down from previous estimates. Cocoa futures dropped, while robusta coffee prices increased amid slow sales by Vietnamese farmers, maintaining stocks in hopes of higher prices.

On March 13, 2023, raw sugar futures experienced a significant rise, reflecting persistent concerns regarding climate conditions in Brazil and reduced forecasts for Indian sugar production. Specifically, raw sugar increased by 0.39 cents, or 2.1%, settling at 19.25 cents per pound, driven by a nearly 6% increase over the past week.

The Indian Sugar Mills Association projected that India’s sugar output will fall to 26.4 million metric tons for the current season, a reduction of 2.94% from the earlier estimate of 27.2 million tons. The market sentiment also indicated that India may not fulfill its one million ton export quota due to local price increases that have made mills cautious in signing further contracts.

In related market activities, white sugar prices rose by 1%, reaching $538.70 per metric ton. Meanwhile, the cocoa market faced a downturn, with London cocoa futures declining by 148 pounds, or 2.3%, to settle at 6,341 pounds per ton. Expectations determined that the March cocoa contract would expire this Friday, with a notable premium established for delivery against the May contract.

The New York cocoa market also fell by 2.2%, settling at $8,172 per ton as March contracts were poised to expire, with approximately 10,000 tons changing hands during the delivery period. In the coffee sector, robusta coffee prices rose by $20, or 0.4%, to $5,528 per ton due to reduced farmer sales in Vietnam, where farmers are reportedly retaining 30% to 40% of their stock in anticipation of higher prices. Conversely, arabica coffee saw a slight decrease of 0.3%, settling at $3.857 per pound, and Brazil’s coffee exports decreased by 12% in February, attributed to low bean availability.

In summary, the raw sugar market has gained traction due to adverse climatic conditions impacting production in key countries. Meanwhile, cocoa has witnessed a downturn amidst contract expirations, and the coffee market reflects cautious optimism among farmers regarding future pricing. These trends indicate a dynamic market influenced by both production forecasts and geographical specifics that remain vital for stakeholders.

Original Source: www.livemint.com