Sugar Market Report for 26 May

The market improved again yesterday pulling of the near 4 weeks lows of the previous session to hit its highest level in a week before settling in the middle of the day’s range. The market had opened 5 points firmer and immediately continued to improve gaining another 30 points over the next couple of hours aided by a firmer macro picture. After a breather the market pushed up further to hit the day’s highs as US traders got to their desks. Eventually, the buying dried up with little evidence of any renewed fund buying. This soon prompted some speculative long liquidation which saw prices descend back through the 17 cent level. The market then remained subdued remaining in a 10 point range through to the close settling some 20 points firmer. The trading volume was, again, limited hit just under 81k lots. The NV improved 1 point to settle at -14 while the VH ended unchanged at -6. In London the structure strengthened slightly with the QV nearly $1 firmer at -0.90 and the VZ also firmer at -1.10. This saw the WP also improve slightly with the NQ WP gaining just over $1 to finish at 81.10 while the VV WP was also slightly firmer at 79.10. The fund selling of the past few days appeared to dry up yesterday allowing prices to improve and push back above 17.00 cents. However, it was not an entirely convincing performance with the spot months still maintaining a discount and the market ending back in the range seen last week.

Unica will release their harvest data for the 1^st half of May at 14:00 (London time) today. A Platts survey across the industry sees a crush for the period hitting just under 39 million tonnes producing 2.17 million tonnes of sugar. That would be lower than last season’s 2.50 million tonnes but higher than the 1.6 million tonnes produced during the same period in 2019/20. The spilt is expected to be around 43/57%. With virtually all mills now crushing during the period the market will start to get a better idea on prospects for the entire season after the generally slow start to this season’s crush.

Brazil’s CS region continues to receive some rain which has been beneficial but sporadic over the past fortnight. Further localised rains will continue to be received over the coming days which will, undoubtable, relieve the dry conditions which will help stop any further deterioration in the cane.

The EU crop monitoring service released their monthly crop forecast and reported that they see the EU sugar beet crop yields slightly lower at 75.5 tonnes per hectare compared to the 75.6 tonnes per hectare of the last report in April. Obviously, there is still a long way to go before harvest and much can change. The weather has been generally beneficial over the past few weeks for the beet areas.

This morning the market opened 4 points firmer in very thin volume. Currently, prices are holding around 5 points firmer. The NV is unchanged at -14 as is the VH at -6. In early London trading the QV and Vz are around unchanged at -0.90 and -1.10. The macro so far today is a generally positive picture with most commodities trending higher. The USD Index is a tad firmer but still remains weak and remains near its lowest level since early January. The sugar market remains uninspiring despite the two day improvement. The Unica data release may trigger some buying if he data is below expectations but with a relatively well supplied physical market there would appear no reason for prices to rally significantly. However, as always, the funds will be pivotal in what happens next. If they decide to re-establish some of the longs sold out recently then prices could push back to above 17.50. if not then the market could languish within the range of the past few days.