Sugar Market Report

Good morning,

The market consolidated yesterday after the drop to over six week lows the previous session remaining in the plus column for much of the day in quiet trading. The market had opened 3 points higher before improving another 5 points. However, prices soon started to slid lower and through unchanged by mid-day to hit the day’s lows. Once US traders got to their desks prices did start to improve jumping 20 points to hit the day’s highs by mid-afternoon but the short covering soon petered out with prices slipping back to close 8-9 points firmer. The trading volume was, again, disappointing at just under 77k lots. The HK improved by 1 point to finish at +58 while the KN ended unchanged at +29. In London the spreads were barely changed with the HK ending at +4.50 and KQ at +4.30. This put the HH WP and KK WP a tad firmer at 79.20 and 87.50 respectively. However, interest is very limited with no block trades registered. The market probably performed better than many had expected after the sell-off the previous day. Support was seen again at the previous lows with a double bottom now in place at 14.09.

There is renewed chatter this morning that the Indian Government will make an announcement regarding export subsidies today following a cabinet meeting. The rumour is that they consider a proposal to provide an export subsidy worth Rs 3,600 per tonne to sugar mills to help export 6 million tonnes of sugar this season. This subsidy is well below the previous subsidy of Rs 10,448 per tonne as International prices are higher and with Thai production likely to be lower again and the new Brazilian season not starting until April there is a window of opportunity for India to export.

Unica reported yesterday that they see total CS crush for the 2020/21 season at 605 million tonnes up 2.5% on previous crop. The see total sugar production at 38.4 million tonnes around 43% higher than last season and exports a massive 705 higher at 27.9 million tonnes compared to last season. Looking forward to the next season they said that Agricultural yields will be lower due to the dry weather earlier this year. Also the quality of the cane fields is likely to impact on sugar production. However, they did concede that if the rains are sufficient over the coming months the outlook could improve.

This morning the market opened 7 points firmer in very quiet trading. Currently prices remain 7-8 points firmer. The HK is 1 point firmer at +59 while the KN is unchanged at +29. In early London trading the HK and KQ are around unchanged at +4.50. The market waits with baited breath for a possible announcement from the Indian government. Whether this happens remains to be seen but it is, obviously, a subject for discussion which should mean some information on their plans is imminent. If the subsidy is at the rumoured level of Rs 3,600 then prices are likely to improve but the extent will much depend on whether the funds will buy on the news. In the meantime the market is likely to remain wary and range-bound. However, a breach of the double bottom at 14.09 may trigger further fund liquidation although reasonable support should be found below 14 cents. The macro is positive this morning with the USD weaker yet again and most commodities trending higher. The BRL improved yesterday to close at 5.083.


Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598



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