Sugar Market Report for 27 April

New 11 year highs were seen in early trading yesterday but with the spot month breaching 27 cents some profit taking pulled prices off the highs. The market had opened 5 points stronger before dipping slightly. However, buying soon emerged taking out the highs of the previous session. The market remained volatile with highs of the day reached by mid-morning as the front month broke above 27th cents for the first time since 28th October 2011. Lack of follow-through buying triggered long liquidation with prices soon dropping back. Prices eventually hit the lows of the day some 70 points off the highs before recovering back into the plus column only to drop back to settle at the bottom of the day’s range but still looking very strong. The KN improved again gaining 5 points to end at +72 near its highest level this month while the NV slipped 4 point to finish at +38. In London, it was a similar story with new highs seen in early trading fading quickly as long liquidation appeared in the spot month. Unlike NY the market remained under pressure for the rest of the session settling just off the lows. The QV dropped to +9.90 its lowest settlement since early November last year. The VZ also slipped lower to finish at +10.30 its lowest since mid-March. This meant the WP also dropped with the VV WP ending at 125.20 and the VZ at 114.90. The drop in prices by the end of the session was not too surprising given the relentless rally recently. However, the momentum still remains firmly on the up-side with the sentiment still bullish. However, London’s relative weakness compared to NY suggests the buying may be waning for the time being.

Unica will release their harvest data for the first half of April at 15:00 (London time) today. The view is that the sugar production amount will disappoint as rain has continued to disrupt the harvest and stopped mills getting into top gear with their crush. A S&P survey see sugar production for the period at 560k tonnes which will be seen as well below current demand levels. However, the crush will, probably, be better than same period last season when just 5.3 million tonnes of cane were crushed producing 131k tonnes of sugar. However, the start of the harvest was late and slow last year after mills gave the cane as much time to recover after the previous season’s drought. Currently, the spit should be high but the ATR probably not so good because of the rain. The weather forecast for the CS over the coming 10- days looks to be drier although still some sporadic showers but it does look as if mills will get operations up and running.

Conab reported yesterday that they see total Brazilian cane crop increasing by 4.4% in 2023/24 compared with last season at 637.1 million tonnes. They also noted that both yields and planted area will grow as well. Sugar production is seen reaching 38.77 million tonnes up 4.7% from last season.

This morning the market opened 3 points weaker before dropping further. Currently, prices are unchanged having recovered from just over 20 points weaker. The KN is 4 points lower at +69 while the NV is 2 points weaker at +36. In early London trading the QV is slightly weaker at +9.50 and the VZ also a tad weaker at +10.50. This morning the macro is a mixed picture with crude higher, after the big drop yesterday while grains/soya are generally lower. The USD Index is unchanged and the BRL ended unchanged last night. The market continues to look firm but at the exalted heights there could be a further correction – which would do little to dampen the market. The soon to expire K-23 will see limited action over the next two sessions. The OI dropped to 36,804 lots yesterday with another 27,758 lots traded yesterday. Currently total delivery looks likely to be around 750k to 1 mil tonnes. Given all the talk of raw sugar tightness it would seem a bit surprising if 1 million tonnes was delivered. The market is expecting a poor Unica report this afternoon which, if slightly better than expectations may trigger some liquidation although, conversely, if even poorer than expected could see a test of yesterday’s highs.