Sugar Market Report for 31 March

Good morning,

The market regained much of the losses of the previous session yesterday as crude improved and the BRL remained firm against the USD. The market had opened 12-14 points higher before swiftly gaining another 15 points on good market on opening buying. The market then slowly dropped back over the next three hours to opening the opening levels putting in the lows of the day. However, as US traders got to their desk, prices started to improve hitting the day’s highs in late afternoon but failed to break above the highs of the previous session and thereby putting in a double top at 19.59/60. Prices fell back in late trading with day trader liquidation seen on the close. The KN gained 1 point to end at +11 while the NV was 5 points firmer at -4. In London it was a different story with the spot month continuing to weaken with eleven sessions before expiry. The KQ dropped $3.40 to finish at +8.90 wiping out all the gains of the last two weeks and over $10 off the highs. The QV also ended over $2 weaker at +7.20. This meant the WP took another large drop with the KK WP down $11.50 at 108.00 while the VV WP was also weaker ending at 93.40. It would seem the recent strength seen in the spot month has waned suggesting current supply is adequate. Overall the NY market continues to roll with the energy markets with the continuing view that the amount of Brazilian CS sugar production will be dictated by the amount of cane used for ethanol which will be closely determined by crude prices and Brazilian fuel policy.

Despite ousting the current CEO of Petrobras the Brazilian Treasury Secretary said yesterday that the replacing of Joaquim Silva e Luna with Adriano Pires will not mean any changes to the Economy Ministry’s position on fuel policy. If this is the case it does beg the question on why the change. It would seem likely that President Bolsonaro may have different ideas.

This morning the market opened 16 points lower on the back of a weaker crude quote (currently down 4%) after US President Biden is said to be considering releasing up to 180 million barrels of oil in the coming months from the Strategic Petroleum Reserve at possibly 1 million barrels a day. Currently, prices are trading 13 points lower. The KN is 1 point weaker at +10 as is the NV at -5. In early London trading the KQ is slightly weaker at +8.10 while the QV is unchanged at +7.20. As mentioned crude is lower today which is making the macro picture negative. USDA data later today may have impact on grains/soya. NY sugar continues to look well support at the moment assuming crude does not collapse from current levels. However, the weakness seen in whites may eventually weigh on raws.