Sugar Market Report for 5 July

It was, as expected, a quiet day in London yesterday with the NY market closed for their Independence Day holiday. Nevertheless, the market ended higher on the day after opening unchanged. The market soon dropped away to hit the lows of the day shortly after the opening. The market then remained range-bound for the morning but prices picked up during the afternoon to close at the highs. On Monday both market continued their correction off the three month lows reached last week. Again it was relatively quiet during the morning with the gains being seen in the afternoon although prices did fall away slightly after reaching the highs.

The N-23 expiry saw 412,000 tonnes (8,118 lots) delivered all from Paranagua with Sucden the main deliverer and Wilmar main receiver. There was some chatter that the small delivery was seen as bullish and, hence, the improvement in the flat price. One could also argue that the lack of receivers may point to limited demand.

The weather across major producing regions is as to be expected at the moment. Dry weather across Brazil’s CS enabling the harvest to progress very well. The Indian monsoon is now covering the whole country which is 6 days earlier than average and pretty impressive given the monsoon started 5 days late. However, rainfall in June was 10 % below average and a pick up in rainfall will be needed in July.

Favourable weather is being seen across much of the EU beet regions which will help boost sugar production. The EU reported yesterday that they see sugar output to rebound more than 6% in 2023/24 to around 16.5 million tonnes. Nevertheless, tight stocks should ensure average while sugar prices remain at record highs. While the planted area is down in France and, to a lesser extent, Germany it is being offset by a sharp increase in Poland.

The market opened 8 points firmer this morning before improving further. However, after the initial market on opening buying was completed prices slipped back. Currently, the market is around unchanged. The VH is 1 point weaker at -8 while the HK is 4 points weaker at +1.27. In early London trading, the QV is a tad firmer at +3.50 while the VZ is a bit weaker at +4.00. This morning the macro is neutral with most markets around unchanged after the US holiday yesterday. The USD Index is also unchanged. The correction that started on Friday may start to stutter today. Much of the recent fundamental news is not particularly bullish. The Brazilian CS harvest continues apace. Analysts’ estimates continue to increase on how much sugar will be, eventually, produced weather permitting. The Indian monsoon is progressing better than some have expected and mills are already talking of an increase in the planted area for next harvest. Assuming rains are adequate then another bumper production, similar to 2021/22, could be seen. Nevertheless, long time to go and El Nino lurks. In the shorter term the market may try to consolidate around 23 cents.