Sugar Market Report for 23 January

Friday saw another day of consolidation with the market ending near unchanged. The market had opened 8 points firmer on opening buying but prices soon started to slide lower and continued to slowly decline throughout the morning and the first half of the afternoon. Eventually, support was found at 19.50 which soon triggered some short covering which saw prices bounce back into the plus column before a bout of selling on the close took prices back to near unchanged. The HK improved 4 points to finish at +131 while the KN was unchanged at +64. In London the HK slipped to +14.90 while the KQ was virtually unchanged at +18.00. This meant the HH WP dropped $1 to 111.60 while the KK WP improved by $1 to 125.60. It was a relatively quiet session with support noted below 19.50 but seemingly little desire to push prices much higher. Indian news that no more exports will be allowed over the 6 million tonnes already agreed has had little impact mainly because it will have little impact short term and secondly because many are taking their announcement with a pinch of salt and prefer to wait to see how production continues.

The COT report, as of the 17th January showed limited activity in any sector. The Funds/specs increased their net longs by 5,689 to 165,286 during a period that prices rose 55 points. The non-commercials increased their net longs by 4,262 to 119,343 suggesting that they were not responsible for the improvement in prices and it was more day traders. The commercials cut their net short position by just 800 lots as the trade exited both longs and shorts during the period. The index funds cut their net longs by 6,490 to 175,692.

The EU has ruled that France cannot use Neonicotinoid during the 2023 beet season. France planned to allow beet farmers to use the pesticide for another year after granting a three-year exemption to a general ban after the 2020 beet crop was severally damaged by pest damage. A ruling published on Thursday by the EU Court of Justice said member states cannot offer exemptions. The French agricultural minister has called for a meeting with beet growers and manufacturers to discuss the matter. The ban could discourage farmers from planting beet this year.

This morning the market opened 9 points weaker on the back of a negative macro picture. Currently, the market is 8 points weaker. The HK is 2 points weaker at +162 as is the KN at +62. In early London trading the HK is firmer at +15.30 while the KQ is, virtually, unchanged at +18.10. The macro is negative this morning with crude and grains/soya lower. The USD Index is also weaker and close to 8 month lows. The BRL ended the week slightly lower against the USD at 5.21. The market seem likely to continue to remain range-bound with little reason to push higher but well supported below 19.50 and the strength of the front month spread. Nevertheless, if the double bottom at 19.46/45 is breached it may trigger further fund liquidation.