Sugar Market Report for 15 August

Yesterday saw an inside day as the market reversed giving back most of the gains of Friday. The market had opened 3 points weaker before improving. The highs of the day were soon in place as prices failed to breach the previous session’s highs thereby forming a double top at 24.41/42. The market soon started to fall back but it was only as US traders got to their desks that the losses became more pronounced. The market continued to fall until late in the session hitting the day’s lows shortly before settlement when some late day trader short covering pulled prices off the lows. There appeared no particular reason for the sell-off although the trading volume was particularly poor at just over 72k lots. The VH improved 1 point to -22 while the HK dipped 3 points to +128. In London the front month spread improved to +15.80 while the ZH was slightly weaker at +9.90. This meant the VV WP improved to 164.70 while the VZ WP was around unchanged at 148.90. The market continues to trade either side of 24 cents with traders seemingly unsure of direction in the short term. The weather across India and Thailand remains wet although it also remains inconsistent in some areas. Nevertheless, it would appear most of the main sugar regions in India have received relatively good rains over the past few weeks.

The harvest across Brazil’s CS has been running full throttle for the past few weeks which bodes well for the first half of August’s data which looks likely to be similar to second half of July. However, rain is forecast from this Friday for several days which is likely to curtail field operations to a certain extent. The weather does appear to be more mixed over the coming 10 days. While it may hamper the crush it will be seen as beneficial to the uncut cane so long as it becomes drier again.

The fifth sugar beet test carried out by the Russian Sugar Producers’ Union shows that beet weight is some 10% higher than last year at 451 grammes up from 406 grammes. However, sugar content is at 14.12% compared with 14.37% last year. This suggests sugar production may be around last year’s levels.

This morning the market opened 2 points weaker but soon improved. Currently, the market is 7 points higher. This morning the VH and HK are unchanged at -22 and +128 respectively. In early London trading the VZ is higher at +16.40 while the ZH is unchanged at +9.90. This morning the macro is mixed with crude unchanged and grains/soya mostly lower. The USD Index is slightly weaker and the BRL was slightly weaker again at 4.96 last night. Traders remain subdued at the moment. Most expect prices to improve given the prospects of a production deficit in 2023/24 but there is still much time for change. Indian production is expected to be unchanged to lower than last year but given it is notoriously difficult to predict their production things could change significantly. Short term the market could push back towards the recent highs especially if the rain in Brazil CS becomes more prolonged.