Sugar Market Report for 1 June

Good morning,

Yesterday saw the NY market end lower after failing to push above 20 cents again. The London spot month continued to remain firm on anticipation of limited availability of deliverable sugars. The market had opened 19 points firmer on the back of a strong London performance the previous session (when NY was closed) and a higher crude quote as the EU increased oil sanctions on Russia. Prices improved further soon hitting the highs of the day and forming a double top at 19.92/93. However, the early speculative buying soon dried up and prices soon started to sag. More selling appeared which saw the market drop further with the opening chart gap filled by mid-day. As US traders got to their desks more selling appeared taking prices down to the first support level at 19.45. This triggered a bout of day traders short covering but it was not long before the market continued to weaken with the lows of the day hit shortly before the close. Some late short covering saw prices pull off the lows but it was a disappointing close. The NV weakened 3 points to end at -17 while the VH dropped 6 points to end at -30. In London the spot month continued to improve with a growing view that the availability of deliverable white sugar maybe limited. The QV surged to +22.10 while the VZ was also slightly firmer at +13.90. This meant the WP continues to improve for the rest of the year with the VV WP ending at 118.00 and the VZ at 104.80. However, further down the board prices weakened probably in anticipation of ample supplies as refiners take advantage of the high WP and India exports start again and Thai exports increase further. Raw sugar appears to be in ample supply with the market finding it hard to justify prices above 20 cents as various analysts see a small global surplus this season and a larger one in 2022/23.

At last the Indian 2021/22 cane harvest is virtually over in most states some 1 month later than usual. The National Federation of Cooperative Sugar Factories reported yesterday they see total sugar production at 35.2 million tonnes. However, the harvest is still continuing in Maharashtra and may only be ended by the on-set of the monsoon which hit Kerala earlier this week.

This morning the market opened unchanged but soon dropped slightly. Currently, the market is 2-3 points weaker. The NV and VH are unchanged at -17 and -30 respectively. In early London trading both the QV and VZ are a tad weaker at +21.90 and +13.60 respectively. The macro is a slightly positive picture with crude higher, grains/soya mixed and the USD Index higher again as it recovers after hitting it lowest level since April last week. There appeared to be a slight sea change in the raws market yesterday with prices dropping back towards the recent lows despite a firmer crude quote suggesting traders see adequate supplies through until end of year at least. The chart gap between 19.27 and 19.20 looms below with a double bottom also seen at 19.27/28. It is likely some support will be seen if the chart gap is filled but if not sufficient then prices could tumble further and towards 19 cents especially if the funds decide to bale out of the longs they purchased to take prices up to 20.24 in mid-May. As the connection between crude and sugar prices appears to be breaking only a large surge in energy prices is likely to have any meaningful impact on sugar for the time being. However, the surge in the whites is likely to give some support although the funds are unlikely to take too much notice of London’s strength.

Please note London white sugar is closed Thursday 2^nd and Friday 3^rd June for the Queen’s Platinum Jubilee holidays. NY sugar will have a delayed opening of 12:30 (London time).