Sugar Market Report for 19 April

The market spent most of the session in the negative column before pushing higher late in the session on general buying across the commodity spectrum to end at another new settlement high. The market had opened unchanged but soon slowly slipped lower. After this initial drop, the market settled into a narrow 12 point range for the rest of the morning and only awake as US traders got to their desks with another bout of selling appearing taking prices down to the lows of the day. However, good buying was noted below 24.20 which, eventually, had trader traders covering and prices improved back to opening levels. Late in the session prices jumped higher as fund buying appeared in other soft commodities. The market gained 26 points in less than 15 minutes before topping out just shy of 24.70. As the close approached speculators liquidated taking prices down some 15 points from the highs. The KN slipped again to settle 4 points weaker at +60it’s weakest in 6 sessions. The NV was 2 points weaker at +33. London saw a reversal from the previous session with the QV gaining $1.50 to end at +15.70 while the VZ was $1 firmer at +13.70. This meant the WP also improved with VV WP at 139.40 and the VZ at 126.20. The market proved its resilience yesterday after dropping back only to improve impressively late in the session. The funds seem happy to remain long and are not going to be spooked into liquidating while the technical picture remains positive. The market does remain over-bought but likely to correct without any significant sell-off. With eight trading sessions to go before the K-23 expiry the OI dropped to 122,737 with another 50k lots traded yesterday. Currently, the delivery looks likely to be limited with Brazil likely to be the only major origin. Nevertheless, the longs will be looking to further squeeze shorts unable to deliver or end-users still to price.

Indian mills have produced 31.1 million tonnes of sugar by the middle of April which is 5.4% lower than the same time last season when mills went on to produce a record 36 million tonnes. 400 mills have ceased operations for the season including all mills in Maharashtra ISMA reported. Total production in Maharashtra reached 10.5 million tonnes down from 13.7 last season. It would now seem total production will struggle to reach ISMA’s last estimate of 34 million tonnes with some believing it will only reach 33 million tonnes.

Australia’s sugar production is estimated to increase to 4.4 million tonnes in 2023/24, from an estimated 4.2 million tonnes in 2022/23. This increase is due to an expected rise in sugar cane crush to 33.5 million tonnes from an estimate of 32.6 million tonnes this season.

This morning the market opened 8 points lower but soon improved. Currently, prices are 13 points firmer. The KN and NV are unchanged at +60 and +33 respectively. In early London trading the KN is firmer at +17.30 and the VZ at +14.80. The macro is a negative picture this morning after the good performance yesterday. The USD Index is unchanged while the BRL ended at 5.00 last night. The market remains firm although the spot spread is weakening. A test of the highs is probably needed soon otherwise some long liquidation may be triggered. However, the market does remain, technically, over-bought which may be another trigger for a correction if the market starts to lose momentum. While a lot of the bullish fundamental news in the market there is still another uncertainty to keep the market well supported.