Sugar Market Report for 17 August

The market reversed again yesterday cancelling out most of the losses of the previous two sessions to close firm. The market had opened unchanged before very swiftly dropping to the lows of the day on follow-through selling after the previous weak close. However, the weakness was short lived with prices quickly remaining the earlier losses and continuing to climb throughout the morning breaking above 24 cents as US traders got to their desks. Prices continued to improve during the afternoon before resistance was found at 24.25 which halted to rally with the highs of the day being reached. However, prices did not fall back too much but the market remains within the recent range. The trading volume remains limited at just under 96k lots. The VH improved 1 point to end at -23 while the HK was unchanged at +127. In London, the VZ continued to improve ending at +18.20 its highest level since April. The ZH was also a tad higher at +9.90. This meant the VV WP ended slightly firmer at 168.30 while the VZ finished at 150.10. There was somewhat an inevitability that the market would improve yesterday having yo-yoed either side of 24 cents over the past week. However, the strong performance does suggest a move higher looks more likely at the moment.

Little fresh news around with traders continuing to monitor rainfall in several key producers. The Indian monsoon has been rather better than many had feared but, as is often the case, erratic in rain distribution. There is still time for things to improve further. Thailand’s rain has been more problematic with lower than average rains. In Brazil an episode of rains is being seen at the moment which will hamper the crush. However, periods of rain are expected from time to time during the winter. The concern is that the rain continues for a prolonged period. Northern Europe has had cool wet weather which should be beneficial to the beet and is in stark contrast to the very dry conditions prevailing across southern Europe, especially Spain and Portugal.

This morning the market opened 6 points higher before falling back. Currently, the market is 3 points firmer. The VH and HK are around unchanged this morning at -23 and +128 respectively. In early London trading, the VZ is a tad lower at +18.00 while the ZH is unchanged at +9.90. The macro is slightly positive with crude higher, grains/soya mixed and other commodities around unchanged. The USD Index is unchanged as was the BRL which finished at 4.99 again last night. It would seem the market will continue around current levels but with a potential up-side bias given the probability of a production deficit in 2023/24.