Sugar Market Report for 23 August

The market improved for much of the session but eased back by the close to settle unchanged. The market had opened 8 points higher and then remained either side of unchanged before creeping higher reaching the highs as US traders got to their desks. However, as seen the previous session, selling appeared mid-afternoon which took prices down to the lows where better support was found at 23.30 and below. The market eventually ended unchanged on a day when the trading range was one of the smallest for some weeks. The VH ended unchanged at -31 while the HK slipped lower again finishing at +105 its lowest since the end of June.

In London, it was also quiet with just the first six contracts trading. The VZ slipped a tad lower to +16.40 while the ZH was a little higher at +9.00 which meant the VV WP was slightly lower at 165.50. The VZ WP was unchanged at 149.10. The market seems unsure of direction at the moment. Prices remain within the range seen this month albeit at the bottom end having now formed a double bottom at 23.29/31. While there are still concerns over what impact El Nino could have on weather across the globe and more specifically in India/Thailand and Brazil attention has turned to demand which has waned recently and the tightness seen at the beginning of the year has dissipated as Brazil harvests its bumper cane crop.

Limited fresh fundamental news around. Unica should release their harvest data for the first half August either tomorrow or Friday which should show a similar crush and production as for the second half of July (around 53 million tonnes cane crushed producing 3.7 million tonnes of sugar). This will maintain the 20% cumulative increase compared with last season and should also surpass the cumulative sugar production for 2021/2022 at this time.

Russian sugar beet is heavier but lower sugar content according to the latest report by the Russian Sugar Producers Union. Sugar content is at 14.94% compared with 15.72% a year earlier. However, average root weight is at 505 grammes up from 467 grammes this time last year.

This morning the market opened 5 points lower but soon dropped further. Currently, prices are 18 points lower. The VH is 2 points lower at -33 while the HK is 3 points lower at +102. In early London trading the VZ is firmer at +17.00 while the ZH is also firmer at +9.30. The macro is slightly negative with crude lower, grains mainly lower and the USD Index around unchanged. The BRL was a tad former last night ending at 4.93. The double bottom has been breached and this may trigger some further long liquidation with 23 cents the next downside target. The large amount of Brazilian sugar available is weighing on the market with end users awaiting lower levels.