Sugar Market Report for 3 March

A late rally saw the market settle near the highs after prices held above 16 cents in earlier trading. The market had opened 1 point lower before improving 10 points in thin volume. However, by mid-morning, prices had retreated below unchanged and flirted with the 16 cent level before slowly starting to improve. However, it was not until late in the session that prices managed to push back into the plus column culminating is a surge in buying during the 5 minutes before settlement when prices swiftly gained 23 points. Further gains were seen post-settlement with the market, eventually, ended over 30 points higher on the day. A combination of fund buying and a lack of selling seemed to be the main reason as the macro picture improved elsewhere. The KN was stronger throughout the session ending 9 points firmer at +59 after weakening over the previous sessions. The NV also ended 4 points firmer at +22. In London the market remained firmer bucking the NY trend the previous session. The KQ improved at +16.10 while the QV was nearly $2 firmer at +12.20. This saw the WP improve again and back to the levels of a week earlier after the odd sell-off late last week. The KK WP ended at 103.60 while the NQ WP finished at 100.50. The market’s ability to hold above 16 cents was probably key to the late rally with many specs caught short as had looked set to fall back into the range seen during the second week of February. Gains across the commodity spectrum as the USD dropped after 3 days of gains was probably the main catalyst for the late buying.

Despite the weakening of the USD the BRL continued to drop hitting 5.70 against the USD at one point yesterday before ending at 5.66 its lowest level since early November. President Jair Bolsonaro’s latest intervention to prevent rising fuel prices and a possible truckers strike had investors selling. The weakening of the BRL is not likely to have a huge impact on sugar as Brazilian mills are already very well priced for the up-coming season it did cause coffee prices to slip.

As of the 26th February Thailand had crushed 61.36 million tonnes of cane some 16% lower than the same time a year earlier. Total sugar production is running at 6.833 million tonnes around 14.5% lower year on year. While the harvest did start around 10 days later than last season it is very unlikely the total will improve much against the previous season’s production of 8.3 million tonnes. Attention is now turning to next season and whether here will be any sizable improvement in production. Currently, most analysts see a modest improvement to around 85 million tonnes of cane.

This morning the market opened 7 points higher from settlement and unchanged from last print. So far the highs of the previous session (16.53) have held with prices falling back into the negative column. Currently, prices are around 3-4 points lower. The KN is 1 point weaker at +58 as if the NV at +21. In early London trading the KQ is firmer again valued around +16.90 while the QV is valued also higher at around +12.50. The macro is mixed this morning with agricultural commodities mostly slightly higher while metals are lower. The USD index has improved slightly. The late improvement yesterday caught many by surprise but, so far, there has not been any major follow-through. It would seem likely that more consolidation will be seen with prices likely to trend slightly higher although much will depend on the macro. The continuing strength of London whites and the market’s ability to hold 16 cents yesterday will be seen as positive.

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Kevin Watkins, Steven Trigg

Phone: +44(0) 20 7716 8598

Email: admisi.sugar@admisi.com

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