Sugar Market Report for 2 August

The market improved for the second day running as decent physical business is noted while production prospects continue to be a concern. The market had opened unchanged but soon pushed higher and quickly bettered the previous day’s high. Prices eventually topped out at just below 24.40 which prompted more selling which took prices down to the lows of the day by the time US traders got to their desks. However, it was not long below good fresh buying appeared taking prices nearly 60 points of the day’s lows before prices, as swiftly, retreated. The volatility continued as prices then recovered to close firm although 18 points off the highs. There was little change in the spreads suggesting the flat prices buying was speculative in nature. The VH was unchanged at -18 while the HK was 1 point weaker at +136. London saw a more pronounced improvement with the structure and WP improving. The VZ was $2.50 firmer ending at +12.90 its highest level since early June while the ZH was nearly $3 firmer at +13.10. The WP firmed with the VV WP up over $10 at 162.00 and the VZ $7.50 stronger at 149.10. while the trading volume still remains underwhelming it was a good performance with good support at 24 cents and below.

The Indian Sugar Mills Association announced in a statement yesterday that India’s sugar production could fall to 31.7 million tonnes in 2023/24 from the 32.8 million tonnes produced in the current season. They also estimate consumption will be around 27.5 million tonnes. There was limited information on how they got to this figure but it is very early to make too many assumptions with the monsoon still at its peak.

Brazil exported 2.98 million tonnes of sugar in July some 3.5% higher than in July 2022. With production remaining very high as the CS harvest progresses it is likely exports will remain very buoyant over the coming months.

This morning the market opened unchanged but soon improved. Currently, the market is 16 points firmer. The VH is 3 points firmer at -15 while the HK is 2 points stronger at +138. In early London trading, both VZ and ZH are a tad firmer at +13.30 and +13.60 respectively. This morning the macro is a positive picture with crude and grains/soya higher while the USD index is slightly lower. The BRL ended slightly weaker yesterday at 4.79. The market now seems well supported so prices could continue to improve with 25 cents the next target on the up-side.