Sugar Market Report for 4 April

Good morning,

Friday saw another inside day as the market consolidates for the third session after its drop below 19 cents earlier in the week. The market had opened 7 points lower in volatile trading soon slipping another 6 points. Prices then recovered hitting the day’s highs late morning. However, it was not long before crude’s weakness eventually weighted on prices, with the market dropping from the highs of the day to the lows within the space of an hour. Another recovery of prices was then seen as crude improved slightly with prices getting back to unchanged before drifting lower by the close to settle down on the day. The KN improved by 1 point to end at +18 and its highest level since early March. The NV slipped 3 points to settle at -5. In London the KQ weakened slightly to end at +10.20 while the QV was virtually unchanged. This meant there was little change in the WP with KK WP ending a tad lower at 111.50 and the VV WP at 96.20. It was somewhat of a rather non-descript session with little fresh fundamental news as the market remained watchful of the macro which remained slightly negative.

The COT as of the 29^th March showed that the funds/specs increased their net long position by 2,656 to 97,556 during a period when prices rallied 50 points before collapsing 80 points. This meant that the non-commercials barely changed their net long position which dropped by just 120 to 56,560. They may have been more active than the figures suggest as the short term funds may have bought and sold during the period although the larger long term funds seem to be absence from the market. The commercials increased their net short position by 3,369 to 334,865 as both gross longs and shorts covered, again, probably a consequence of the large move during the reporting period. The Index funds appeared quiet cutting both gross longs and shorts for a small 714 increase in their net long position to 237,308.

Latest news from India sees a total of 31 million tonnes produced by the end of March. Indian mills are also seen to have signed up to 7.2 million tonnes of exports for the current season. Therefore, if the government restricts exports to 8 million tonnes in total, then less than one million tonnes is still available to sell.

Friday marked the official start of the 2022/23 Brazilian CS cane harvest although it is unlikely a frantic start will be seen as mills wait as long as possible before commencing operations to allow the cane to benefit from rain which continues to fall with scattered episodes of rain over the coming 10 days. Brazil exported 1.44 million tonnes of sugar during March down 27% from the 1.94 million tonnes exported in March 2021. This is mainly a consequence of the lower production of last season.

Syria state agency has issued an international tender to buy 25k tonnes of raw sugar according to traders. Tender date is 26^th April priced in euros.

This morning the market opened unchanged before improving. Currently, prices are 9 points higher. The KN is 1 point better at +19 while the NV is also slightly firmer at -4. In early London trading the KQ is slightly lower again at +9.80 while the QV is barely changed at +8.00. This morning the macro is positive with crude just over 1% higher while grains/soya are all stronger. The USD index is unchanged. The BRL continues to improve against the USD ending at 4.67 on Friday its best level in just over two years. The market continues to look well supported with the BRL the main bullish factor while crude prices remain relatively firm. The news that Indian mills have already contracted to sell 7.2 million tonnes of sugar will also be seen as positive, despite it being likely a new production record will be achieved, if the Indian government restrict total exports to 8 million tonnes. If nothing else there will be limited selling above the market with just Thai millers the main sellers.