Sugar Market Report for 21 March

The market weakened again yesterday mainly on the back of the turmoil on the other financial markets. The market had opened 17 points weaker on some beefy market on opening selling. Once completed prices did, marginally, improve but soon turned lower dropping to the lows of the day. A decent recovery was then seen which saw the market just make it into the plus column before falling away again with the day’s lows revisited shortly before settlement. Late short covering saw prices improve but still settled at the lowest level since the 3^rd March. The KN slipped 3 points to end at +49 with good support building at +48. The NV also weakened 4 points to end at +24. In London the KQ ended virtually unchanged at +13.70 while the QV was firmer at +14.80. However, the WP slipped slightly with the KK WP ending at 129.00 and the VV WP at 118.70. The market continues to react to the wider macro picture with a decidedly risk-off attitude taken by all. One could argue that sugar has done reasonably well given the situation and the larger falls in some other markets which does remind traders that the underlying fundamental picture for sugar is supportive.

StoneX updated their Brazilian CS expectations for the soon to start season. They now see total sugar production at 36.8 million tonnes as the total cane available rises by 6.2%. They see mills using a very high percentage of the cane to produce sugar with ethanol parity well below current levels. To this end total ethanol production has been cut from 26 billion litres to 25.80 billion litres.

This morning the market opened 12 points higher before slipping slightly. Currently, prices are 6 points firmer. The KN is 1 point firmer at +50 while the NV is 2 points better at +26. In early London trading the KQ is a tad firmer at +14.00 while the QV is virtually unchanged at +13.90. The macro is a more settled picture this morning although most commodities are trending slightly lower. The mayhem in the broader markets is likely to continue for the time being. Most of the concerns remain concentrated on the banks. The USD index has fallen over 1.5% in the past 5 sessions as further interest rises appear to be off the agenda for the time being. Sugar appears to be still well supported but still remains beholden to the macro. A break below the recent low at 20.35 could trigger further fund liquidation although end users will be keen to buy into any weakness.