Written Commentary
Written by Howard Jenkins, Head of Global Commodities
The volatility of the past few weeks has not dissipated with sugar prices seeing a 130 point range over the past week. To put this into context the range for the entire third quarter was just under 200 points. However, one reason for the volatility is the lack of trading volumes. This is hardly surprising given the uncertain times. This week the triple whammy of the increasing global economic woes due to the pandemic, lack of clarity from the Indian government on their export policy and the US Presidential election have combined to make many traders very wary.
While there has been no official word from the Indian Government comments from their Food and Commerce Minister, Piyush Goyal, did unsettle traders earlier this week. He suggested there was no need for an extension of the export subsidies seen for the past two seasons as sugar prices are stable. His comments are very much open to interpretation but it did cause prices to jump to fresh eight month highs by Tuesday. However, Tuesday saw the US voting in their Presidential election which quelled the buying. As of this morning the result remains unclear. Biden appears to be edging it but Trump has called the entire presidential election into question and issuing lawsuits to boot which may mean the official result is many days away. Meanwhile the Coronavirus continues to surge again in many countries exacerbating the uncertainty.
Back in the cane fields it continues to rain across Brazil’s CS which is slowly quashing fears of any meaningful drought damage for the next harvest especially as the wet weather looks set to continue. In India the above average monsoon is slowly clearing which will allow the cane harvest to get going in earnest. With this season’s production estimated to be at least 5 million tonnes more than domestic consumption it seem inconceivable some export ‘incentives’ will not be needed from the Government. However, until confirmation the uncertainty should continue to support prices unless the funds get spooked by the shenanigans in Washington.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
Email: admisi.sugar@admisi.com
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