Sugar Market Report for 14 July

The market improved again yesterday settling above 24 cents for the first time since 23rd June and over 200 points above the lows a fortnight ago. The market had opened unchanged and remained within a narrow range throughout the morning unable to break above 24 cents. However, this changed after mid-day as a bout of buying took prices swiftly through the level only to reverse the gains virtually immediately. The market then remained range bound and just below unchanged until late in the session when prices rallied to above 24 cents. The VH lost 1 point to finish at -13 while the HK gained 3 points to end at +138. In London, the structure continued to strengthen. The QV ended slightly higher at +20.00. The Q-23 expires today with the expectation of a very small delivery. The Q-23 OI dropped to 4,412 lots with another 2,198 lots traded yesterday. The VZ also firmed to +10.50. This also helped the WP to improve further with the VV WP finishing at 141.40 and the VZ WP at 130.90. Aided by a continuing weak USD and a bullish fundamental background few will be surprised that the market continues to improve and rally strongly off the lows of late last month.

The US Climate Prediction Centre reported yesterday that there is a more than 90% chance of El Nino continuing through the Northern Hemisphere winter. The impact of El Nino is already being seen. Despite being fairly weak so far above-average sea surface temperatures have been noted across the equatorial Pacific Ocean in June. How strong El Nino develops and how long it persists remains to be seen but concerns that it will impact on the weather across Asia and more specifically India and Thailand are continuing to build. However, at the moment it is raining across the two producers at the moment with decent rains across Maharashtra at the moment after scant rains receive during the early monsoon.

This morning the market opened 7 points higher. Currently, the market is 5 points higher. The VH is unchanged at -13 while the HK is 1 point weaker at +137. In early London trading the QV is around unchanged at +20.00 while the VZ is firmer valued at +10.90. The macro is negative this morning after two days of gains across most commodities as the USD Index dropped to its lowest level since early April 2022 as US inflationary fears start to ease. The BRL ended slightly firmer last night at 4.80. The market looks set to remain firm with a bullish fundamental picture mainly on weather concerns and continuing tightness in the physical market. The COT tonight is likely to show a small increase in the funds net long position but with low trading volumes recently no significant changes are expected. The Q-23 expiry today is not expected to see any fireworks given the small OI and expected small delivery which should be seen as bullish given the large spot month premium.