Sugar Market Report for 12 July

The market remained rangebound yesterday in relatively light trading volume. The market had opened 3 points firmer but immediately weakened dropping to near the lows of the previous session where some light support was found. This prompted prices to improve on some light short covering but prices dropped again in front of the release of the Unica harvest data. However, when the Unica report was below expectations prices instantly improved soon hitting the highs of the day. Late day-trader liquidation pulled prices from the highs to settle around the same level for the past 5 sessions. The VH lost another point to end at -13 while the HK was down a couple of points at +133. In London, the spot month improved against the rest of the board with 4 sessions to go until expiry on Friday. The QV improved $4.70 to end at +19.00 while the VZ was virtually unchanged at +8.10. The OI in Q-23 dropped to 9,671 lots with another 6,230 lots traded yesterday continuing to suggest a small delivery. The WP improved with the VV WP ending at 138.10 and the VZ WP at 130.00. The market had threatened to break lower in price but lower than expected sugar production across Brazil’s CS had prices quickly reversing with the market remaining rangebound between 23 and 24 cents.

Unica released their harvest data for the second half of June yesterday afternoon. The report showed that 43.00 million tonnes of cane was crushed during the period producing 2.70 million tonnes of sugar from a 49.43/50.57 sugar/ethanol split. The crush and production amounts were below most expectations. Despite the lower than expected production, the harvest is going well. Near maximum cane is being used to produce sugar and the agricultural yields remain high and at 16% more than seen last year. Cumulative sugar production for the season is running some 25% higher than this time last season. Some analysts are suggesting record production could be seen if the weather remains good for harvesting.

A Syrian state agency has issued an international tender to buy about 25,000 tonnes of raw sugar in was reported earlier today. The closing date for submissions of price offers is 2nd August. Shipment should be 70 days after opening if LC and the price must be in Euros.

This morning the market opened unchanged before improving. Currently, prices are 10 points higher. The VH is 3 points weaker at -15 while the HK is 3 points firmer at +138. In early London trading, the spot month continues to firm. The QV is +21.00 while the VZ is also stronger at +8/70. This morning the macro is a slightly positive picture with most commodities trending higher and the USD Index lower again. The BRL ended slightly stronger at 4.87 last night. The market looks likely to remain rangebound for the time being. The lower than expected Brazilian harvest data and the need for more rain across several sugar states in India is supporting prices at the moment. However, lacklustre physical demand is seen as limited gains for the time being. The weakening of the front spread is evidence of this and not conducive for a big flat price rally.