Sugar Market Report for 4 May

The market dropped lower again yesterday but ended around unchanged in a quieter day than of late. The market had opened 6 points lower before dropping further to hit day’s lower about 30 mins after the opening. The support from 25 cents was enough to stop the decline before long and prices soon started to improve and were soon back to unchanged. Prices held around either side for the rest of the morning before improving further as US traders got to their desks. The market dropped back to opening levels as crude made another leg lower but soon recovered only to fall back on the close to end a tad higher on the day. The NV improved 2 points to finish at +33 while the VH was 1 point weaker at +37. In London the spot month came under selling pressure dropping $6 which meant the QV ended nearly $3 lower at +9.80 while the VZ was also weaker at +9.40. Both spreads now back to the lows of their recent range. The WP also dropped back with VV WP ending at 130.20 and the VZ at 120.80. There was some early follow-through selling after the weak close the previous session but this soon dwindled triggering some speculative short covering but there was little sign of any significant fresh buying. Nevertheless, it does suggest good support below 25 cents which is likely to remain in place. The deterioration of the macro again with crude dropping again to near the year’s lows also limited any significant rally developing.

The head of sugar at Louis Dreyfus, Enrico Biancheri, speaking during the New York Sugar week said that the current price rally was justified due to very tight physical market and low stocks and prices need to remain high to encourage more production by farmers. If this does not happen then larger production deficits will be seen in years to come. He also suggested prices could rise further if El Nino takes hold across Asia causing production problems in Brazil India and Thailand. Another near term concern, he said, is that waiting time to load sugar at Brazilian ports could rise to, at least, 30 days due to congestion as other commodities compete for port berths. Dreyfus’ concerns are echoed across the industry at the moment and does suggest prices are unlikely to drop too much lower for the time being.

This morning the market opened unchanged, improved and then fell back to unchanged.

The NV is 2 points firmer at +35 while the VH is 1 point better at +38. In early London trading the QV and VZ are both a little firmer at +10.00 and +9.60 respectively. This morning the macro is mixed with crude firmer after two days of losses while most other commodities lower while the USD Index is a tad lower. The BRL ended around unchanged at 5.00 last night. The market looks likely to try to consolidate around current levels with good support below 25 cents. However, it would seem there is little appetite to aggressively buy the market at current levels although that could quickly change.