Sugar Market Report for 22 September

Good morning,

The market stabilised yesterday after the volatility of the past two sessions. The market ended slightly firmer as the front month remained at a healthy premium. The market had opened 10 points firmer and then remained within a narrow 10 point range until early afternoon when prices ticked up to hit the highs of the day and just shy of 18 cents. Unable to push higher the market then dropped away as day-trader selling appeared as the macro turned negative. The market dropped nearly 30 points to hit the lows of the day shortly before settlement when prices improved to close in the middle of the day’s range and back in the centre of the range seen since mid-August. The VH improved 2 points to +41 while the HK strengthened 3 points to +63. In London it was a different story as the market sagged again with Z-22 dropping $6.10. The ZH dropped $2 to +25.80 while the HK slipped $1 to end at +9.70. The WP has dropped considerably from its levels a week ago with the ZH ending at 129.00 and the HH WP at 103.20. There appears to be a view that the very high WP as of late is helping to slowly ease the tightness in white sugar. Overall, the market has recovered from the losses of Friday and Monday and appears happy to consolidate back in the recent range just below 18 cents.

The Indian Government’s Food Secretary, Sudhanshu Pandey, said yesterday that the Government will announce a quota for sugar exports “very soon” for the new season which starts in just over a week. It is expected an initial tranche of 5 million tonnes will be allowed with another 3-5 million tonnes later in the season once the harvest and domestic prices are evaluated.

This morning the market opened 2 points lower before improving in thin trading. Currently, the market is 1-3 points firmer. The VH is 2 points better at +43 while the HK is unchanged at +63. In early London trading the ZH and HK are unchanged at +25.80 and +9.70 respectively. The macro is a negative picture this morning after the Fed’s 75 basis point interest increase last night and their hawkish comments about future interest rate increases. Most commodities are trending lower with the USD Index at its highest level since June 2002 at 111.40. The BRL weakened slightly yesterday to end at 5.173. The market is likely to remain range-bound. The V-22 remains at a premium with, just over a week until expiry. The OI dropped to 82,806 lots with another 23,302 lots traded yesterday suggesting a limited delivery. The market continues to await news from India on their export policy.