Sugar Market Report for 6 June

The market ended lower yesterday despite an early spike higher ending at its lowest level since 21st April and some 240 points off the contract highs. The market had opened 12 points firmer and continued to improve another 23 points as the OPEC cut in crude production encouraged some early buying. However, prices swiftly fell away from the highs and were back to unchanged after a couple of hours. The market continued to weaken finding some initial support around 24.50 before this was breached with prices dropping to the lows of the day. A swift bounce back into the plus column was seen but the improvement was fleeting with prices falling back to the lows of the day by the close. The NV slipped 1 point to +21 while the VH lost another 4 points to end at +14 it lowest level since mid-April. In London it was a similar picture with QV weakening to +6.50 while the VZ slipped to +10.40. The WP also weakened with the VV WP at 136.60 and the VZ WP at 126.20. There has, undoubtedly, been a change in sentiment towards the sugar market over the past few days. There appears to be a growing view that physical supply will improve over the coming weeks as the large Brazilian CS production starts to be shipped. There are still some question marks over the Indian monsoon but local forecasters are still expecting normal rains.

The onset of the Indian monsoon is expected to be delayed by another 2-3 days weather forecasters have warned. It is still predicted that the monsoon will soon pick up momentum and cover the whole country in a timely manner. El Nino is still lurking in the shadows but is not expected to make any significant difference to the amount of rain received across the country. Across in Brazil, the CS is now dry and conditions remain excellent for field operations until, at least, the middle of June although some further sporadic rains are expected second half of the month.

A Government statement in Indonesia says it wants to raise white sugar output to 2.6 million tonnes this year. This will be 200k tonnes more than produced in 2022. Indonesia plans to import 991k tonnes of white sugar for household consumption and 3.6 million tonnes of raw sugar for Industrial use this year.

This morning the market opened 4 points firmer but soon push higher improving another 18 points. However, prices have now eased back and are, currently, 5 points firmer. The NV is 3 points firmer at +24 while the VH is 2 points firmer at +16. In early London trading the QV is slightly firmer at +6.80 while the VZ is unchanged at +10.40. The macro is mixed this morning with crude now down to pre-OPEC cut levels. Grains/Soya mostly higher with wheat seeing good gains recently. The USD Index is barely changed and the BRL ended slightly better at 4.93 yesterday. The market looks likely to continue to slowly ease lower. The funds are selling and end users buying. The structure is weakening. However, any suggestion of some bullish news could see prices push higher as there will not be too much resistance in place unless prices get back towards 26 cents.