Sugar Market Report for 11 August

The market improved again yesterday despite higher than expected harvest data from Unica. The market had opened 14 points higher, but as has been the case over the past several days, prices then retreated into the negative column and the lows of the day mid-morning. However, prices then started to improve and becoming more volatile peaking at the highs of the day shortly after the release of the Unica data. Values did drop back in later trading as profit takers emerged taking prices back to end bang in the middle of the day’s range. The VH slipped back 2 points to end at -22 while the HK was just 1 point firmer at +125. In London it was a quiet day with the VZ barely changed at +13.60 while the ZH dropped slightly to finish at +11.30. The WP also weakened slightly with the VV WP ending at 163.00 and the VZ WP at 149.40. Unica was bearish but the ISO report was bullish and that seemed to hold sway given most other analysts are predicting a deficit for 2023/24.

Unica released their harvest data for the second half of July yesterday afternoon. It showed that during the reporting period mills crushed a total of 52.96 million tonnes of cane producing 3.68 million tonnes of sugar with a 50.65/49.35 sugar/ethanol split. This was slightly above expectations but all were expecting high numbers. Cumulative sugar production is now at 19.17 million tonnes up nearly 20% year on year. The weather has continued to be ideal during the first half of August suggesting another strong crush and production will be seen in the next Unica report.

The International Sugar Organisation released their first estimates for the 2023/24 season yesterday. Similar to CovrigAnalytics estimate earlier in the week the ISO see a deficit of 2.12 million tonnes. Somewhat oddly they cite an expected decline in production in Brazil as well as the seasonality of the harvest as the main reason for the deficit. They see total global production at 174.84 million tonnes and consumption at 176.96 million tonnes which is just a 0.3% increase due to high domestic prices which is lowering consumption expectations.

The US Climate Prediction Centre reported yesterday they see a more than 95% chance that El Nino conditions will prevail throughout the Northern Hemisphere winter. Whether El Nino continues through for much of next year remains to be seen. Therefore, concerns will continue that it will impact on the latter stages of the Indian and Thai monsoon and also cause rains to set in early across Brazil’s CS hampering the later stages of the harvest.

This morning the market opened 4 points firmer but soon dropped back. Currently, the market is 9 points weaker. The VH is 1 point lower at -23 while the HK is unchanged at +123. In early London trading the VZ is a tad weaker at +12.80 while the ZH is unchanged at +11.30. The macro is a slightly negative picture this morning but grains/soya quiet in front of the USDA report later today. The USD Index is unchanged as was the BRL which ended at 4.89 last night. The market continues to look well supported but may consolidate around the 24 cent level for the time being.