Sugar Market Report for 9 February

Yesterday was a volatile session with prices, eventually, ending higher led by the spot month. The market had opened unchanged but soon improved slightly remaining within a relatively narrow range throughout the morning. The market saw a spike higher as US traders got to their desks before dropping back into the negative column and the lows of the day. However, with 30 minutes of the session to go a wave of buying appeared quickly taking prices some 57 points higher to hit the highs of the day during the settlement period and regaining much of the losses of the two previous sessions. The trading was excellent again at just shy of 295k lots although 75% was spreads as the funds continue to roll positions forward. The HK jumped gaining 17 points to settle at +133 its strongest for 5 sessions. The KN also improved 7 points to finish at +70. In London the HK improved slightly again to +3.10. The KQ also was $3 higher at +17.70. The OI in H-23 fell to 14,322 lots with another 9,660 lots traded yesterday. With 3 trading sessions until expiry, it looks as if the delivery will be small. The WP also improved with the HH WP ending at 101.50 and the KK WP at 127.30. The late rally higher took traders by surprise. Much of the buying was in H-23, was probably trade buying while the funds were good buyers of the structure. Perhaps with the Index fund roll coming to an end, some are positioning themselves to take delivery and squeeze short who are unable to deliver.

The USDA reported yesterday that very good yields by beet producers in the US which will off-set not such good cane production. This means total sugar production will probably reach 9.23 million long tonnes for 2022/23 very similar to the 2021/22 production and the second highest production on record. Imports were little changed at 3.46 million tonnes which gives a 14.8% stocks-to-use ratio seen at a comfortable level.

French farmers protested in Paris yesterday by driving around 500 tractors into the French capital. They are protesting over the banning of pesticides among other issues. The EU ruling that France cannot allow their farmers to use neonicotinoid to prevent damage to beet has upset farmers as they see imports from other countries not subject to similar restrictions threatening the industry. Whether the protests will have impact remains to be seen but the French Government has already ruled they will abide by the EU decision although the French farming fraternity does have extremely strong lobbying ability.

This morning the market opened 9 points firmer before improving further. Currently, the market is 22 points firmer. The HK and KN are both 2 points firmer at +135 and +72 respectively. In early London trading the HK is much firmer at +7.10 while the KQ is a tad weaker at +17.40. This morning the macro is a positive picture with crude slightly higher along with other commodities while the USD Index is lower. The BRL ended virtually unchanged last night at 5.20. The market looks strong buoyed by some general fund buying across the commodity complex and good buying in the spot month which looks likely to continue to be squeezed and a return to the highs seen last week cannot be ruled out as the HK improves further.