Sugar Market Report for 20 December

Yesterday saw the market maintain the gains of the previous session ending slightly higher on the day after an earlier rally ran out of steam. The market had opened unchanged before slipping slightly. However, it was long before the market started to improve with steady gains seen throughout the morning with the highs of the day reached early afternoon. However, the fresh buying eventually dried up and liquidation increased which saw prices give back all the earlier gains and, eventually, dropping into the negative column. In the end, prices improved going into the close, to end marginally higher although additional buying during the post-settlement window saw prices gain another 8 points. The HK lost 6 points on some light profit taking while the KN ended unchanged at +83. In London, the market strengthened with the structure also firmer. The HK gained nearly $3 to finish at +18.00 while the KQ was also slightly firmer at +18.70. This meant the WP also improved although interest was limited. The HH WP finished at 109.20 and the KK WP at 118.40. The market remains remarkably firm. Even confirmation that Indian sugar production is some 5% ahead of last year as of 15th December did not dampen the market. The prevailing view is that there is still a raw sugar physical tightness which will continue into the first quarter 2023.

Citi bank reported yesterday that they maintain their ‘neutral-bearish’ stance on sugar for 2023. In their outlook report, they said that strong output levels in Asia will mean a global surplus as slower consumption impacts due to the broader economic slowdown next year.

This morning that market opened 1 point firmer before, quickly, improving further. The market is, currently, 16 points higher. The HK is 6 points firmer at +127 while the KN is 5 points firmer at +88. In early London trading, the HK is firmer at +18.70 while the KQ is also stronger at +19.60. This morning the macro is mixed with crude lower, other commodities mixed and the USD index weaker. The BRL ended virtually unchanged yesterday at 5.299. The market continues to remain firm and seems likely to remain that way through to year-end, especially the front spread. The funds are long and are unlikely to liquidate. Traders are tidying up before the holidays and year-end so trading volumes likely to remain low which may increase volatility.