Sugar Market Report for 1 June

The market came under selling pressure yesterday as the negative macro picture continued mainly on the continuing US Debt ceiling crisis. The market had opened 3 points lower but soon came under pressure dropping another 28 points over the next hour before support was found just above 25 cents. The market then quietening into a narrow 10 point range until late morning when it started to improve. However, it was pretty volatile although a mid-afternoon jump saw prices push into the plus column before quickly falling back continuing the fall to settle near the lows. The NV lost 1 point to end at +32 while the VH eased by 3 points to finish at +26. In London, the structure weakened with the QV at +9.60 and the VZ at +13.40. The WP also slipped with the VV WP ending at 141.10 and the VZ WP at 127.70. Having failed to break higher the previous session the market was under pressure throughout the session with the macro headwinds stopping any gains. There has been no significant change in the fundamental picture although concerns are developing over the fate of the EU beet crop.

A cold and wet spring has delayed the planting of the EU beet crop. France has seen delays of around 10 days, 14 days in Poland and up to 21 days in Germany. Other northern European countries have suffered a similar fate including the UK. This may lead to slow early growth which could impact on final yields. However, it is a long time before harvest and much can happen – good and bad – to the crop. The EU crop monitor MARS reported last week that they had cut their EU beet yields to 76.7 tonnes per hectare compared with 77.5 tonnes per hectare in their April estimate. The total planted area looks likely to be higher (apart from France) with farmers attracted to the crop by the very good prices being paid by processors.

India has exported the entire 6.1 million tonnes of sugar allowed by the Indian government. With production likely to end over 8% lower than last season there is no scope for any further exports this season. For next season there is a good possibility exports will resume but under strict quota but all will depend on production prospects.

This morning the market opened 4 points firmer before improving. Currently, prices are 22 points firmer. The NV is 1 point firmer at +35 while the VH is unchanged at +26. In early London trading the QV is unchanged at +9.60 while the VZ is weaker at +12.70. The macro is a more positive picture this morning with most commodities trending higher after the US House of Representatives approved a deal to set the debt ceiling. In a vote not as close as some had expected it now has to go to the Senate who will vote on it today before being signed off by President Biden. The agreement will be in place until the beginning of January 2025. The market has reacted in similar fashion to other markets in improving in early trading. Assuming the macro does not turn negative again some further gains look likely today although a huge rally developing would seem unlikely at the moment. Longer term much will depend on the weather across India, Thailand and the EU over the coming months not to mention Brazil’s CS which has seen some heavy rain over the past few days which is likely to impact on crushing.