Market Commentary

20/02/20: Sugar Market Morning Report

The market improved yesterday, at one point, just nine points off the multi-year highs reached last week before slipping a little by the close. The market had opened 3 points better and at the highs of the previous session. This turned out to be virtually the low of the day as the market slowly improved through the morning culminating in gains of 25 points by mid-day. However, with the BRL opening weaker some selling appeared which took prices back to their opening levels by mid-afternoon. However, fresh buying soon had prices improving and the day’s highs were hit some 90 minutes before the close. News that Brazil’s Petrobras had announced a 3% increase in gasoline prices was the main driver to this move. As mentioned prices slipped back some 14 points by the close on some speculative long liquidation. The whole of the board was pulled higher by renewed strength in the HK which improved to +57 (up 16) at one point before settling 9 up at +50. The KN also improved ending 4 better at +20. In London the KQ was firmer at +7.60 while the QV was also a little firmer at +7.50. The positive performance of the previous day was probably the main catalyst for yesterday’s improvement although the underlying positive fundamental picture is also keeping sentiment positive.

The Thai harvest continues with little evidence of any catch up with last season’s record sugar production. As of the 17th February the total cane crush had hit 69.32 million tonnes down 17.25% on the same time the previous season. White sugar production had hit 1.68 million tonnes down 6.45% while raw sugar production is running some 19.2% behind last season at 5.65 million tonnes.

Mexican sugar production is also running behind last season. As of the 15th February total cane crush had hit 20.85 million tonnes some 17.5 % down on last season. Sugar production hit 2.05 million tonnes down 23% on last season. Vane yields are 10% lower while sugar yields are virtually the same.

This morning the market opened 3 points firmer before slipping back some 8 points on some early producer selling. Once finished prices quickly improved into the plus column. Currently, prices are around 5-6 points firmer. The HK is unchanged at +50 while the KN is 1 point better at +21. In London the KQ is a tad firmer at +7.80 as is the QV at +7.80. This puts the KK WP slightly weaker at 88.10 and the QN WP also weaker at 85.15. After yesterday’s push higher further gains look likely with a test of last week’s highs on the cards. Producer scale up selling noted in K-20. Additional selling noted further down the board but above current prices suggesting Brazilian selling if prices push above ethanol parity. Technical support seen at 14.85 (10 day ma) then 14.62 (mid BB) then 14.25/24 (double bottom) then 14.10 (50 day ma). Resistance seen at 15.20 (upper BB) then 15.29 (last week’s high) then 15.59 (May 2017 high).

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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