Sugar Market Report for 14 March

The market fell yesterday as the macro took a distinctly risk off attitude on concerns over the banking sector after the collapse of Silicon Valley Bank in the US and fear it may cause contagion across other similar banks. The market had opened 7 points higher but soon started to fall initially finding some support just above 21.00 cents. However, as other markets got the jitters prices started to fall further and by the time US traders got to their desks prices were on the lows of the day. Support was eventually found at 20.70 and just above the lows of the previous session. A sharp recovery was then seen with prices bouncing nearly 50 points over the next 90 mins. However, once the short covering dried up prices fell away again dropping back to near the lows on the close. The KN lost 5 points to settle at +51 while the NV was 4 points weaker ending at +21. In London the structure weakened slightly with KQ at +11.80 and the QV at +13.00. The WP held steady with the KK WP at 124.00 and the VV WP at 115.10. The macro was, as mentioned the main factor influencing prices yesterday. Sugar had shrugged off macro weakness last week with positive fundamental sentiment continuing to support prices. However, as markets across all asset classes tumbled selling spilled over into sugar. However, the losses were limited with prices remaining within the range seen over the past week.

There is limited fresh fundamental news around. The harvests in India and Thailand look likely to finish earlier than anticipated resulting in lower production although still debatable by how much. The Brazilian CS 2023/24 harvest should get underway before the end of the month. Currently, it continues to rain but there are signs of drier weather beginning to arrive over the next 10 days. Mills will be keen to start this season’s crush with sugar prices high and cane still standing from last season when rain cut the tail.

This morning the market opened 6 points higher. Currently, prices are 1 point lower. The KN and NV are both 1 point firmer at +52 and +22 respectively. In early London trading the KQ is virtually unchanged at +11.90 while the QV is firmer at +13.50. This morning the macro is more stable but still negative. Crude and most commodities are trending lower while the USD Index is recovering after falling to its lowest level in a month yesterday. The BRL ended weaker yesterday at 5.246 it weakest close since 9th February. The market is showing good resilience considering the wider macro picture which does suggest fundamental considerations continue to support the market and a move back to the high seen last week could be seen in the short term. The COT still remains delayed which makes the current fund position difficult to fathom. The report for the 28th February should be released either today or tomorrow.