Sugar Market Report for 10 May

The market remained range-bound yesterday virtually remaining within the range of the previous two sessions. The market had opened 3 points lower before dropping further to hit the lows of the day an hour after the opening. Support was soon found below 26.00 cents and once the early selling dried up prices started to improve quickly gaining 35 points before some selling appeared. Prices then remained in a volatile mood for the rest of the session pushing up above 26.40 three times while also falling back into the negative column. Failing to break above 26.40 yet again prices dropped back on the close to end bang in the middle of the day’s range. Both NV and VH dropped 1 point to end at +35 and +39 respectively. London was playing catch-up after being closed on Monday. The market gapped lower on the opening after NY’s lower close the previous session before improving as NY rallied. However, it soon ran out of steam and remained under pressure for much of the day. The QV dropped nearly $2 to +8.80 having hit +8.20 its lowest level since end of October last year. The VZ was also lower at +9.40. This meant the WP also slipped with the VV WP finishing at 130.60 and the VZ at 121.20. The market is struggling to break decisively above 26.50 having tried and failed for the past three sessions and another two last week. However, the longs appear to have little desire to liquidate so the downside is also limited. However, if a break higher is not seen soon then the market could see a more extended drop as upside momentum is lost.

It has become drier over the past fortnight across Brazil’s CS which has allowed the 2023/24 crush to get into top gear after rain hampered the start. It also looks set to remain dry for, at least, the next 10 days which bodes well for the harvest and sugar production. Unica should release their latest harvest data for second half of April by the end of the week (some believe today) which should show a marked improvement from the first half of April which only saw 542k tonnes of sugar produced. Traders will be hoping production has increased to well over 1 million tonnes.

This morning the market opened 2 points lower but soon lost another 10 points. Currently, prices are 3 points weaker. Both NV and VH are unchanged at +35 and +39 respectively. In early London trading, the QV and VZ are a tad firmer at+9.00 and +9.50 respectively. This morning the macro picture mixed with crude a tad lower and grains/soya around unchanged and the USD index a little lower. The BRL ended unchanged at 5.00 last night. As mentioned above the market need to break above 26.50 to maintain the up-side momentum. However, at the moment, there would seem little reason to fresh buy at the exalted levels. The key now is how the CS harvest fairs over the coming weeks. London’s weakness in flat price and structure could be seen as negative. Nevertheless, a drop back is not expected to turn into a rout with support at 25 cents and below likely to be pretty solid.