Sugar Market Report for 18 July

The market dropped back yesterday more of a correction than because of any significant shift in the fundamental picture. The market had opened 4 points higher tried to push higher but failed to break above the previous day’s high, thereby forming a double top at 24.40/39. The market was soon in the negative column before, initially, finding some support at around 24.10. However, more selling appeared as US traders got to their desks and the market was soon sliding again. Prices soon broke below 24 cents with continuing selling taking prices down to the day’s lows mid-afternoon before the selling abated somewhat and more buying appeared which saw the market pull off the lows. However, the market remained weak and closed well down on the day. However, as had been the case on the way up the trading volume was poor at just under 87k lots. The VH lost 1 point to close at -15 while the HK was also 5 points weaker at +137. In London, it was a similar picture as the structure weakened slightly. The VZ finished at +7.40 while the ZH ended at +10.50. This meant the WP also slipped slightly with the VV WP at 144.70 and the VZ WP at 137.30. it was always likely a correction would be seen after prices rallied just over 250 points since hitting the three month lows at the end of June. Nevertheless, pressure is seen on the Brazilian domestic market as high production means there are ample stocks at the moment. White sugar demand is slow which is also because consumption usually reduces at this time of year due, in part, to school holidays.

Brazilian mills have hedged around 4.5 million tonnes of 2024/25 sugar exports according to Archer Consulting. This represents around 17% of projected exports. This is below the 24% hedged this time last year for 2023/24 but, of course, have a higher average hedge price of around 20.50. They also believe that another good cane crop will be seen next season due to good weather so far and the prospect of some cane being left in the fields at the end of this season.

The Indian monsoon has seen good rains during July which has made up the shortfall during June. However, as is often the case, there has been uneven distribution so far which has caused some concerns, especially in Maharashtra where farmers are concerned that low rainfall during the crucial growing period could reduce yields and sugar production. However, there is still much time for things to improve although El Nino could cut rainfall during the latter part of the monsoon.

Egypt’s ESIIC has announced a tender for 50k tonnes of raw sugar from any origin for September/October. Offers should be submitted on a CIF basis.

This morning the market opened 9 points weaker before slipping slightly. Currently, prices are 11 points weaker. The VH and HK are unchanged at -15 and +137 respectively. In early London trading the VZ is unchanged at +7.40 while the ZH is a tad weaker at 5 +10.20 The macro is mixed with crude around unchanged and grains/soya slightly lower. The USD Index is weaker and at the recent lows. The BRL ended at 4.81 last night. There would seem little reason for prices to drop too much more from current levels. There is still concern over the monsoon rains across India and therefore their production ability. Next season’s supply and demand will be pivotal on the amount of exports from India. The threat from El Nino continues to lurk in the background.