Sugar Market Report for 20 June

With NY closed for national holiday London was quiet after an initial flurry of activity. The market had opened $1.70 higher before, immediately jumping another $4 before slipping back slightly. Another bout of buying saw the market hit the highs of the day an hour after the opening before giving up all the gains over the next couple of hours. The market then became becalmed for the rest of the session flipping back and forth either slide of unchanged before ending slightly lower on the day. The structure improved from the weakness of late last week with the QV ending at +3.00 and the VZ at +6.20. The early activity soon dissipated with a rather non-descript day typical of a US holiday session.

The COT as of the 13th June showed that the funds/specs increased their net long position by 14,748 to 193,399 during a week that the market rallied over 150 points so an increase was to be expected. The non-commercials increased their net longs by 11,998 to 147,000 as the funds cut gross shorts and added to gross longs. The commercials increased their net shorts by 17,020 to 327,835 as producers sold into the rally. The Index funds increased their net longs by 2,272 to 134,436 although longs and shorts were covered in front of the spot month option expiry.

The EU crop monitoring service announced yesterday that they have reduced their expected beet yield by 1% from 76.7 t/ha to 75.9 t/ha. This is probably mainly on the general late planting of the EU crop due to wet spring weather.

Egypt’s strategic sugar reserves are sufficient for six months the government said in a statement yesterday. They added that stocks are sufficient for this period considering that the new season for cane and beet will begin in early 2024.

The market opened 18 points lower before swiftly dropping another 15 points. Prices have continued to fall and are, currently, 46 points lower and below 26 cents in N-23. The NV is 4 points weaker at +30 while the VH is 1 point weaker at +25. In early London trading the QV is up slightly at +3.40 while the VZ is $1.20 lower at +5.00. This morning the macro is mixed with crude around unchanged, metals lower and grains/soya higher. The USD Index is firmer while the BRL ended at 4.77 yesterday. There would appear no particular reason for the drop in prices this morning.

Perhaps some rain in Bangkok has concerned the bulls at the Thai sugar conference? The Indian monsoon is also progressing as expected. It would seem unlikely a rout will develop with prices still near the multi-year highs but a further pullback to below 26 cents looks possible.