Sugar Market Report for 24 March

The market reversed direction yesterday giving back most of the gains of the previous session. The market had opened 1 point firmer before slipping slightly. However, support was found at 21.10 which encouraged some fresh buying with prices hitting the highs of the day as US traders got to their desks. However, an attempt to push through the contract highs hit the previous session soon petered out which soon triggered a bout of liquidation which took prices swiftly lower. There was a small bounce before prices eased again with the market ending near the bottom of the day’s range although prices jumped 9 points during the post-settlement period. Understandable the KN slipped on profit taking as well ending 8 points weaker at +50 while the NV finished 3 points weaker at +28. In London it was a similar picture with the KQ $1 weaker at +14.80 as was the QV ending at +16.40. However, the WP was only marginally weaker with the KK WP finishing at 137.20 and the VV WP at 123.20. The reversal seen yesterday probably emphasises the speculative nature of the market at the moment and the thin trading conditions with the total volume just under 115k lots yesterday. Prices still remain very near contract highs with, seemingly, little desire to drop too much more for the time being. The funds probably hold the key as to which direction the market takes next. While they do have a sizable long position they are sitting on a hefty profit so under limited pressure to sell.

The Thai 2022/23 harvest is coming to an end. As of the 21st March total crush has reached 93.08 million tonnes producing 10.88 million tonnes of sugar. Current estimates for total production is now between 11 million tonnes and 11.5 million tonnes but much will depend on how the crush ends in the Northeast region. Nevertheless, total production will still be the largest since 2018/19 when over 14.5 million tonnes was produced.

This morning the market opened 8 points firmer but immediately dropped back to unchanged. Currently, prices are unchanged. The KN is 1 point firmer while the NV is 2 points firmer at +30. In early London trading both KQ and QV virtually unchanged at +16.60 and +16.40 respectively. This morning the macro is a mixed picture with crude lower, grains/soya mostly higher and the USD Index firmer. The BRL weaken slightly ending at 5.29 last night. The market looks likely to try to consolidate around current levels before another attempt to make a new contract high. The funds seem reluctant to extend their longs at these levels. The up-to-date COT will be published tonight which is likely to show the funds have lessened their net longs during a period when prices dipped to their lowest level in 10 sessions. Overall the market looks likely to remain within the range seen over the past three weeks.