Sugar Market Report for 26 January

The market broke higher yesterday closing above 20 cents for the first time in seven sessions. The market had opened 5 points firmer but immediately dropped 20 points eventually posting the day’s lows some hour after the opening. Prices then remained within a narrow 10 point range until US traders got to their desks when prices started to improve. Some resistance was encountered in front of 20 cents but once breached a couple of buy stops were triggered quickly taking prices higher where they remained through to the close. The HK and KN both improved by just 1 point to _127 and +67 respectively. In London, the spot premium continued to erode hitting its lowest level since late November before settling at +10.50. The KQ was also slightly lower at +16.10. The HH WP dropped again to 103.60 and the KK WP to 121.20. A tale of two markets yesterday as NY rallied as London slipped lower. Good support in NY at 19.50 and below gave the bulls confidence to buy knowing there is very limited selling above the market.

Unica will release their harvest data for the first half of January at 14:00 (London time) this afternoon. It is likely to be somewhat irrelevant as the crush for the season is now virtually completed. Total sugar production may creep over 33.5 million tonnes but with only a handful of mills still operating production will be minimal. All eyes are now turning to the prospects for the 2023/24 season which officially starts at the beginning of April but some mills may start earlier given cane has been left in the fields due to wet curtailing field operations last season. Of course, much will depend on whether it dries up sufficiently. At the moment the cane is looking in excellent condition and some analysts have raised their expectations to 600 million tonnes of cane for the season which would be around 10 % more than last season and not far from the record cane crop of 2020/21 when over 605 million tonnes was crushed and over 38 million tonnes of sugar produced.

This morning the market opened 3 points weaker but soon improved. Currently, prices are 1 point firmer. The HK is 3 points firmer at +130 while the KN is 2 points firmer at +69. In early London trading, the HK is slightly weaker at +10.20 while the KQ is unchanged at +16.10. This morning the macro is fairly neutral with crude a little higher and most other commodities around unchanged to a tad firmer. The USD Index is unchanged but the BRL was stronger last night ending at 5.07. Having closed above 20 cents it would seem prices will remain firm and could improve further. However, with the London structure weakening and the WP dropping prices may run into some resistance around 20.25. However, there is precious resting selling in the spot month some of it could improve further.