Sugar Market Report for 25 August

Yesterday saw a volatile day with prices, eventually, settling at their highest level since the 11^th August. The market had opened 14 points higher but soon reversed and slipped into the negative column. However, this was pretty short lived with prices soon climbing back to opening levels. Values continued to improve breaking above the previous day’s highs as US traders got to their desks. Prices dipped slightly in front of the Unica report but eventually improved to settle just off the highs. However, again the structure did not move too much. The VH ended 1 point lower at -34 while the HK was 4 points firmer at +112. London did not see to same amount of speculative buying as NY under pressure from weakening spreads. The VZ ended nearly $3 lower at +13.60 while the ZH also dropped $3 to finish at +5.90. This meant the WP weakened with the VV WP down at 157.90 and the VZ WP at 144.30. The news that India will not export next season still was the main piece of news despite decent harvest data for Brazil’s CS by Unica. Fund buying late in the session seemed to be the main reason for the late rally.

Unica released their harvest data for the 1^st half of August yesterday afternoon. It showed that the total crush was 47.87 million tonnes producing 3.46 million tonnes of sugar from a 50.77/49.23 sugar/ethanol split. This was a little below expectations but still a large amount. Cumulative sugar production has now reached 22.67 million tonnes for the 2023/24 season some 21.7% higher year on year.

The Indian government sought to clarify rumours on Wednesday that they would not allow any exports during the 2023/24 season yesterday. The Department of Food and Public Distribution said in a statement that the Government will decide on sugar exports for next season once firm estimates of total sugar cane production becomes available. They want to make sure they have adequate availability for domestic consumption, ethanol production while maintaining closing stocks of 6 million tonnes. Monsoon rain have been 50% below average in parts of Maharashtra and Karnataka which could lead to lower yields. ISMA have already put total production at some 3% lower than last season at 31.7 million tonnes last month and likely to lower this estimate before long.

This morning the market opened unchanged before dropping further. Currently, the market is 6 points lower. The VH and HK are both 1 point lower at -35 and +111 respectively. In early London trading the VZ is weaker at +12.40 while the ZH is also slightly weaker at +5.70. The macro is generally positive this morning with crude and most grains/soya firmer. However, the USD Index is firmer while the BRL ended slightly weaker at 4.88 last night. Despite yesterday’s late rally it does seem that prices are happy to trade around 24 cents for the time being. However, if the funds are beginning to have more of an appetite for sugar then prices could improve as they have ample ability to buy large volume.

London Sugar market is closed on Monday 28^th August for Summer Bank Holiday. Consequently the NY market will open later at 12:30 pm (London time) with normal closing time.