Sugar Market Report for 6 April

Good morning,

The market improved again yesterday pushing up to its highest level since 7^th March although fell back by the close ending in the middle of the days range. The market had opened 10 points firmer before falling back only to rally again reaching the day’s highs within 40 minutes of the opening and breaching the previous day’s high. However, better selling was encountered above 19.80 which triggered some long liquidation which saw prices slowly retreat back to opening levels by the time US traders got to their desks. Prices continued to drop eventually falling into the negative column where support was found which allowed prices to improve by the close to settle with minimal gains. The KN dropped 4 points to +15 while the NV was unchanged for the second session at -5. In London the flat price improved against NY but the front spread continued to weaken ending at +8.70 while the QV was slightly firmer at +7.30. This meant the WP improved with KK WP ending $3 firmer at 111.40 while the VV WP finished at 97.60. The market continued to be influenced by the price of crude and the BRL the latter weakening slightly to end at 4.65 last night but still near two year highs.

Limited fresh fundamental news around. Indian and Thai production is higher than predicted pre-harvest but all eyes will be on the start of the Brazilian CS harvest. While the official start of the season was last Friday most mills are not expected to start operations until the second half of April so it will be several weeks before a clearer picture will emerge on the amount of cane being diverted to ethanol production at the expense of sugar.

This morning the market opened 5 points firmer but soon fell back to unchanged. However, with crude improving prices have improved and are, currently, 8 points firmer. The KN is 1 point firmer at +16 while the NV is unchanged at -5. In early London trading the KQ is slightly weaker at +8.50 while the QV is slightly firmer at +7.90. The OI in K22 has dropped below 20k lots yesterday with another near 7k lots traded yesterday. This morning the macro is mixed with crude unchanged and grains/soya slightly firmer apart from wheat which is down. The USD index is firmer adding to the gains of yesterday and is now at its highest level since May 2020 after hints from the Fed that they may increase interest rates by 50 basis points at the next meeting. As mentioned above the BRL slipped slightly yesterday probably mainly on the USD strength. The market will continue to take its lead from the BRL and crude for direction but there does not appear to be any physical supply issues at the moment although the expected late start to the Brazilian CS harvest is also supportive. Resistance is seen above 19.90 while support should be found at the double bottom of 19.24/25.