Sugar Market Report for 9 June

Good morning,

The market regained all the losses of the previous session to settle unchanged from Friday. The trading volume improved as the fund roll started in earnest with over 75% of the total volume spread based. The market had opened 4 points weaker before dropping another 4 points to hit the lows of the day in early trading. However, once this initial selling dried up prices soon pushed back to unchanged. From then on in prices slowly improved in an orderly manner until the highs of the day were hit around mid-afternoon. Prices dipped back slightly before improving on the close to settle 5 points off the highs. The NV improved 5 points in good volume to end at -4 while the VH ended a tad lower at -18. In London the QV also improved ending at -3.20 while the VZ was virtually unchanged at -3.80. However, the WP took a bit of a knock with the NQ dropping nearly $5 to 75.10 while the VV WP slipped $4.40 to end at 77.40. Yesterday’s action was a mirror image of the previous session which meant prices were trawling over old ground which has also been the case since the beginning of the month having been caught in a 73 point range for the past seven sessions. Consequently, flat prices interest has been limited and is likely to continue to be the case until prices break convincingly out of the current range.

The rain continues to fall across much of Brazil’s CS. The forecaster Somar report it has been a rainier start to June with more rainfall predicted for the next few days. The rain has been heaviest in Parana, Mato Grosso do Sul and Sao Paulo which should be beneficial to the sugar cane. However, the coverage has not been uniform and some areas are still suffering considerably from dry weather. Between now and 23^rd June it is expected that rainfall could be as high as 90-100mm in Parana and Rio Grande do Sul while Sao Paulo could receive between 40-60mm of rain with up to 800mm in Southern Mato Grosso do Sul. Whether this rain is too late to have any real impact on the cane remains to be seen although the old adage that ‘Rain makes Cane’ should be remembered. It is unlikely analysts will be increasing their sugar production for the season they may wait longer before making any lower predictions.

The French Farm Ministry, yesterday, increased their estimate for the country’s sugar beet area marginally by 1,000 hectares to a total of 397,000 hectares. This seems to confirm that the majority of the sugar beet plantings that had been so badly impacted by the unseasonably late frosts in April were replanted. This would suggest the growing season will be shorter and, therefore, yields impacted. However, the weather has been good for the crop development recently.

This morning the market opened unchanged before improving slightly to push above yesterday’s high by a couple of points. However, once this early buying had been completed prices dipped back and are, currently, 8-10 points lower. The NV is firmer again in early trading having traded at between -3 and flat so far today. This would suggest that some trade houses are positioning themselves to take delivery while the funds roll their positions forward. The VH is unchanged at -18. In early London trading the QV is valued a tad lower at -3.50 while the VZ is unchanged at -3.80. The macro is mixed this morning with crude firmer while Grains/Soya are lower. The USD Index is also a tad lower at 90.00. Sugar remains caught within the recent range with selling at above 17.80 and buying below 17.30. It is difficult to justify prices breaking out of this range although prices have spiked in front of the past two expiries. However, the rain across Brazil’s CS may deter the buyers for the time being.