Raw Sugar Price Holds Steady on Sentiment India Will Lower Import Tax
Raw sugar prices ticked higher on Tuesday, with the commodity continuing modest price fluctuations as investors gauge the potential for India to lower import duties, to allow sugar supplies to enter the country as drought is set to push the country’s sugar production down to a seven-year low.
India already announced in mid-January that it would not lower its sugar import tax in the near-term, but as sugar prices in the country continue to rise, and the supply situation in the country deteriorates, the pressure on the government continues to rise. Sugar prices in the local market have risen more than 10% in a month on an expected drop in production after drought damaged the crop in the country’s top producing region two seasons in a row.
Earlier in the month, the Indian Sugar Mills Association lowered its sugar production estimate for 2016-17 by about 9%. The industry group expects the country to produce 21.3 million tons of sugar, down from its 23.37-ton estimate in September. India’s sugar production by mid-January was already down by 6% year-over-year.
As production expectations decline in the world’s number two sugar producer, money managers have increased their bullish expectations on the commodity. As of the week ended Jan. 17, speculators increased their net long positions in raw sugar by 3,747 contracts to 161,630. Technically, sugar prices remain supported. Technical indicators and moving averages have the commodity rated as Buy. Raw sugar futures were recently at 20.48 cents per lb. Short-term support is at 20.23 and resistance at 20.37. On a monthly basis, the commodity actually climbed its resistance level, of 20.46, today. Monthly support is at 18.23.