Sugar Market Report for 30 May

Good morning,

The markets ended slightly higher after a quiet day on Friday as the market started to consolidate after failing to hold above 20 cents. The market opened 3 points weaker but soon started to slowly improve gaining 12 points to hit the highs of the day late morning. However, the buying soon dried up with prices soon slipping and gaining more momentum as US traders got to their desks. Eventually, the market fell into the negative column with support being found at 19.40 with a long weekend in the States looming a bout of short covering saw prices improve over the last hour of trading to settle slightly higher on the day. The trading volume was particularly poor only reaching 67k lots. The NV and VH both improved by 2 points to end at -14 and -25 respectively. In London much of the trading was concentrated in the front two months. The QV slipped slightly to end at +16.80 while the VZ was a little higher at +12.50. This meant the WP remained strong with the VV WP gaining another $2 to finish at 115.60 and the VZ WP also firmer at 103.10. The market remains firm but maybe struggling to maintain the momentum which saw prices gain 160 points in just three sessions. News that Brazil is likely to lower the ICMS state tax is seen as bearish as it will lower gasoline prices. The change still need to pass through the Senate. President Bolsonaro is keen to keep gasoline prices stable as a control for inflation and help with his attempt to win the Presidential election in October.

The COT as of the 24th May showed that the funds/specs had increased their net longs by 5,372 to 134,558. This was during a period that the market fell from 20.00 cents to 19.45 with a couple of re-visits to above 20 cents. The non-commercials increased their net longs by 7,713 to 88,747 which was probably expected as the continued to add which was probably the main reason prices manged to get above 20 cents. The commercials increased their net shorts by 6,898 to 378,548 as producer selling noted above 20 cents. The Index funds increased their net long position by 1,526 to 243,989.

The International Sugar Organisation (ISO) reported on Friday that they had revised its estimates for the current season. They now see a small global surplus of 237k tonnes compared with their last estimate in February of a deficit of 1.92 million tonnes. They also now see a 2.77 million tonne global surplus for 2022/23. They see export availability from Brazil, especially for raw sugar, as good for the remainder of the current season.

Thailand’s Office of the cane and sugar board reported on Friday they expect the country to export 7.6 million tonnes of sugar in 2021/22 which would be an increase of 46% on last season’s exports. They confirmed that a total of 10.15 million tonnes of sugar was produced from 92.07 million tonnes of cane.

It would appear the Indian monsoon has officially started a couple of days ahead of schedule with the arrival of rains across the southern state of Kerala yesterday. They will now slowly envelop the rest of the country. Last month the Indian Meteorological Department said they expect the monsoon to be average which would be the fourth consecutive monsoon to bring adequate rains across the country. However, time will tell if the rain distribution is even. If it is then another bumper cane crop will be expected which would see sugar exports resuming.

With the NY market closed for the Memorial holiday it is likely to be quiet. The London market opened slightly higher this morning and is currently around unchanged. The spreads are a tad weaker with QV valued at +16.00 and the VZ at +12.00.




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