Sugar Market Report for 17 November

Good morning,

The market, somewhat predictably, regained all but 2 points of the losses of the previous session yesterday but the trading volume remain abysmal only just scraping above 60k lots. The market had opened 2-4 points weaker but these levels turned out to be the lows of the day as prices soon swiftly recovered and steadily increased 25 points over the next three hours. The market then held just below 20 cents before, tentatively, pushing above the level late in the day. However, there appeared little desire to push the market higher with the market settling just below 20 cents. The HK improved 6 points to +27 while the KN was 4 points firmer ending at +40. In London it was an, unsurprisingly, quiet post expiry session with only the spot month seeing any real interest. The HK ended slightly lower at +0.10 while the KQ was a tad stronger at +4.40. This saw the HH WP slip to 73.00 while the KK was a tad firmer at 78.90. An inside day recorded as prices remained within the range seen over the past couple of weeks. While the market looks well supported selling is appearing above 20 cents which is thwarting the ability to move higher.

The ICE exchange released the official delivery data for the Z-21 expiry yesterday. A total of 5,678 lots were delivered of which 90% were Indian and the rest Brazilian. The delivery port for the majority of the Indian sugar was Kandla with Suape the other delivery port. Recife was the Brazilian port.

ISMA released their latest Indian harvest data this morning showing that sugar production between the beginning of October and the middle of November reached 2.09 million tonnes. This is some 24% higher year on year but it is still very early in the season to draw any firm conclusions on the final output especially as many mills started crushing earlier than normal this season. Nevertheless, it is a good start and does suggest production will hit the predicted 31 million tonnes if not more. The Maharashtra state sugar commissioner has said that the state’s planted area is up some 8.5% compared with last season to 1.250 million hectares which is the highest area ever. The quality of the crop is also good the commissioner confirmed. ISMA also confirmed that Indian mills have, so far, contracted to export 2.5 million tonnes of sugar for the current 2021/22 season.

Germany’s sugar production from their beet harvest is forecast to rise to about 4.48 million tonnes from 4.10 million tonnes last season according to WVZ.  This is also an increase from the last estimate at 4.38 million tonnes. The beet benefited from good summer rains although rain into autumn may have checked sugar content.

This morning the market opened unchanged before improving slightly and above yesterday’s highs. However, prices have now dipped back to around unchanged. The HK and KN are unchanged at +27 and +40 respectively. In early London trading the HK is a tad firmer at +0.70 while the KQ is unchanged at +4.40. The macro this morning is mixed with crude slightly lower while most other commodities slightly higher. The USD Index is unchanged but hit a new high of the recent move earlier. Despite the reported good start to the Indian harvest the news is in the market so is likely to have little impact. The market still continues to look likely to improve further especially after the swift reversal of the previous session losses. The up-side target is the triple top at 20.15/17 which, if breached, may trigger further buying.