Sugar Market Report for 17 February

The market had another range-bound day but the spot month still maintains its strong premium and remains near the flat price highs. The market had opened 4 points higher and continued to climb throughout the morning gaining another 18 points by mid-day. As US traders got to their desks the market began to slip giving back all the earlier gains and dropped into the negative column. However, the support seen over the previous three sessions just above 19.60 held again which saw prices pull off the lows by the close thereby leaving a triple bottom at 19.61/62. The HK gained another couple of points to settle at +168 but the KN dropped again albeit by just 1 point to +49 to its lowest level since the end of October emphasising the disconnect between the spot month and the rest of the board. In London the KQ improved by just over $1 to finish at +17.70 while the QV ended virtually unchanged at +13.70. It was another day when the spot month threatened to push back to the highs of last week but did not get the traction. The OI in H-23 stands at 106,333 lots as of 15th February which is the lowest, with 9 sessions to go, in over 10 years. Therefore, it would seem total deliveries will be relatively small although much will depend on HK over the coming week or so.

Indian exporters are still hoping to be given extra export quota over and above the 6 million tonnes already approved. However, chatter still continues to circulate that production will fall by 5% compared with last year’s record 36 million tonnes taking the total down to just over 34 million tonnes. Food secretary, Sanjeev Chopra, said on Wednesday that a call will be had to discuss the subject next month after more assessment of the harvest is made. It would seem unlikely further exports will be allowed if production falls to 34 million tonnes.

This morning the market opened 7 points lower against a distinctly negative macro picture again. Currently, the market is 8 points lower. The HK is 2 points firmer at +170 while the KN is 1 point firmer at +50. In early London trading the KQ is firmer at +18.60 as is the QV at +14.20. As mentioned the macro is negative again with crude and most other commodities lower and the USD Index resurgent up 60 points while the BRL was around unchanged last night at 5.21. The market is caught between the spot month strength and the negative macro picture. The support at 19.60 basis K-23 looks solid but a break below could trigger further selling but it would seem unlikely a large drop will be seen. The H-23 remains very firm as the HK premium continues to improve and any significant sell-off would seem unlikely for the time being.

Please note NY Sugar will be closed Monday 20th February for the Presidents’ Day holiday. London will close 1 hour earlier.