Sugar Market Report for 5 May

The market remained range-bound for much of the session only springing into life in the last 30 minutes of the day to close firm. The market had opened unchanged before improving slightly. The market then fell back in thin volume remaining weak through to the middle of the afternoon when the lows of the day were reached. However, as has been the case recently the support below 25 cents remains firm and prices very swiftly bounced off these lows gaining over 30 points in the next 20 minutes. The market paused for a breather before another wave of buying appeared taking prices up another 45 points in the last 30 minutes of the session. The market did slip on the close but it was a positive performance albeit in much reduced trading volume than seen of late which may have helped exaggerate the afternoon move. The structure was unchanged which points a mainly speculative inspired flat price move as the NV and VH remained unchanged at +33 and +36 respectively. In London the spot month improved after its losses the previous session with the QV gaining $1.50 to end at +11.30 while the VZ was also higher at +10.10. The VV WP was firmer at 135.20 as was the VZ WP ending at 131.20. The growing support below 25 cents eventually triggered some speculative short covering after prices dropped 160 points earlier in the week. 

The NY sugar week is now drawing to a close. Yesterday at the Citi/ISO/Datagro conference there was a general view that moving a very large sugar production from Brazil will be, logistically, very difficult. Sucden said it sees limitations to the amount of sugar Brazil will be able to ship due to the large amounts of soybean and corn also being exported. They see the maximum capacity of 2.8 million tonnes per month. 

Consultancy Datagro reported yesterday that they see sugar production for Brazil’s CS at 38.3 million tonnes for 2023/24 due to positive weather and good crop maintenance. If this figure is reached it would be close to the record production of the 2020/21 season when total CS production reached 38.46 million tonnes. This estimate is the highest so far from an analyst. They see total cane crop of 598 million tonnes with the sugar ethanol split at 48% as sugar continues to pay considerably better than ethanol production. 

The ISO see prices remaining at an elevated level in the coming months due to physical tightness and increasing consumption. They see a production surplus of around 2.10 million tonnes in 2023/24 in part due to the potentially huge production from Brazil.

Citi are taking a more pragmatic view on the market. They expect prices to peak during the current quarter before the bumper crop from Brazil’s CS hits the market. They conclude that prices will average 22.90 cents as they see production deficits for the current and next season.

This morning the market opened 8 points higher before jumping another 24 points on some aggressive market on opening buying. Once completed prices slipped slightly but soon recovered. The market is currently 26 points firmer. The NV is 2 points firmer at +35 while the VH is also 2 points better at +39. In early London trading the QV is slightly weaker at +10.40 while the VZ is a tad firmer at +10.40. This morning the macro is a positive picture with the majority of commodities higher and the USD Index lower. The BRL ended unchanged at 5.00 last night. It would seem the correction is over with the good support below 25 cents a catalyst to trigger the late buying yesterday and the follow-through buying this morning. The market looks set to remain firm and could improve further given there is unlikely to be too much resting selling above the market. The next up-side target is 26 cents and then the double top at 26.48/50. 

Please note London closed Monday 8th May due to holiday celebration the King’s coronation. NY market will open later at 12:30 (London time).