Sugar Market Report

Good morning,

The market slipped back yesterday after hitting a near two week high the previous session with profit taking seen in the HK in NY. The market had opened unchanged before swiftly improving some 10 points on some early speculative buying. However, the highs of the day were quickly in place as prices soon started to ease lower with no follow-through buying. Prices did managed to push back to above unchanged for a while but eventually more persistent long liquidation and trade selling had prices dropping again. By early afternoon the market slipped below 16 cents where good support was noted. Prices then remained within a relatively narrow 15 point range through to the close erasing he gains of the previous day. The HK saw some profit-taking losing 11 points to settle at +83 while the KN was also 5 points weaker at +52. In London the HK held firm ending unchanged at +20.80 while the KQ finished a little lower at +18.80. The WP continued to improve with the HH WP ending very firm at 111..30 and the KK WP also up at new multi-month levels at 107.10. However, interest in the WP was limited despite the gains. With the market gaining over 90 points in the previous 3 session it was, perhaps, inevitable some consolidation would be seen yesterday. London remains very firm having hit 4 year highs the previous day as the lack of availability of containers and very high freight rates see buyers looking to source white sugar via the tape which is a break-bulk contract. The London H-21 expiries in seven sessions and it would seem likely prices will remain firm which should add support to NY.

ISMA reported that Indian sugar production reached 17.68 million tonnes during the first 4 months of the season over 25 % higher than the same time last season. According to ISMA about 491 mills are, currently, in operation some 44 more than at the same time last year. Production in the largest sugar producing state, Uttar Pradesh, is slightly below last’s season total at this time at 5.44 million tonnes compared with 5.49 million tonnes while production in the season largest producing state of Maharashtra is running at around 45% higher at 6.38 million tonnes. In Karnataka, the third largest sugar state production is up nearly 20% at 3.43 million tonnes. ISAMA continue to see total production for the season at 30.2 million tonnes some 10% higher than last season’s 27.42 million tonnes. However, on these 4 month production figures it would seem total production will end higher than their prediction with most analysts seeing higher production. The recent Reuters poll put total Indian production at 32.4 million tonnes.

This morning the market opened 10 points higher before quickly dropping back to unchanged where support was found. Currently, prices are holding just above unchanged. The HK is 1 point firmer at +84 as is the KN at +53. In early London trading the HK is firmer at +21.70 and KQ at +19.40. This morning the macro is mixed with crude higher and other commodities mostly slightly lower. The USD continues to slowly improve. The USD index is now some 2.5% higher than in early January when it hit its lower level since February 2018. The BRL remains around unchanged at 5.385. Some further consolidation likely to be seen but with London remaining firm any significant sell-off would seem unlikely. The near-by strength on both markets looks likely to remain but looking further into the year prices look weaker as the next Brazilian harvest looms into view.

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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