Sugar Market Report for 12 October

Good morning,

The market made a good recovery after early weakness as Unica harvest data were below expectations. The market had opened 2 points lower and continued to fall as the macro led by crude weakened. Prices dropped to the lows of the day by mid-morning 24 points down from opening levels. The market then started to slowly recover with more substantial gains as US traders got to their desks. The release of the Unica data saw, initially, a muted response but prices eventually started to improve further ending near the highs of the day and settled at their highest level since 20th July. Unsurprisingly, the HK improved 5 points to end at +93 a new recent high. The KN was 6 points firmer. In London the market remained firm with the ZH up over $1 at +46.10 while the HK was virtually unchanged at +10.90. However, the WP slipped slightly with the ZH WP at 144.80 and the HH WP at 98.75. Yesterday saw the market battle the macro and fundamentals with the latter winning out in the end.

Unica released their harvest data for the second half of September yesterday afternoon. It showed that during the period the crush reached 25.29 million tonnes, producing 1.7 million tonnes of sugar from a 45.42/54.58 split. This was below expectation and showed the extent the recent rains had hampered the crush. Unsurprisingly, the rain has caused the ATR to suffer. The cumulative crush has reached 431.1 million tonnes still 7.88% lower year on year while sugar production has reached 26.33 million tonnes some 2.8 million tonnes below the same time last season. On the one hand the rain has caused field operations to stall the rain will be seen beneficial for the remainder of the cane still standing and for the 2023/24 season where most estimates see a return to near 37 million tonnes. This time last year the cane was suffering severely from draught and the impact of frosts so production started to tail off dramatically. If this year’s harvest is going to better last year’s total of 32 million tonnes it will have to show over the coming weeks and the tail of the harvest looks as if it will extend into next year.

The French farm Ministry forecast sugar beet production will be 32.92 million tonnes down nearly 2% from their last estimate of 33.33 million tonnes. The dry weather during the growing season is the main reason for the lower estimate.

This morning the market opened unchanged before improving. Currently, prices are 7 points higher. The HK and KN are both 1 point lower at +92 and +55 respectively. In early London trading the ZH is up at +48.50 while the HK is around unchanged +11.00. This morning the macro is slightly negative with most commodities slightly lower while the USD Index is around unchanged. The BRL remains weak at 5.22. With concerns over how much sugar will be produced from Brazil’s CS and no news from the Indian Government on their export policy the market looks likely to remain firm and could continue to improve. It has been dry across the CS recently but more rain seen for weekend.