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With a positive demand tone for Brazil sugar and the market still recovering from one of the tightest ending stocks situations in a few decades, the market seems to be in a position short-term to continue to move higher. Traders expect a world production surplus for the coming year but Brazil is the key producer and exporter at the moment and there also seems to be plenty of pent-up demand from end users who tried to avoid high prices last year. The world production surplus is not expected to be burdensome and it will be important to see surging production from India to see the surplus materialize. The market closed slightly lower on the session yesterday but well up from the lows. It was an inside trading session with a relatively tight range. The firm US dollar and ideas that the market is slightly overbought after the surge higher on Monday helped to pressure. News that Egypt made inquiries for 100,000 tonnes of raw sugar was also seen as a factor which might have helped provide some support. Bangladesh bought 10,000 tonnes of sugar at a tender this week. Mexico sugar production for the season so far is running 3% under last year. Russia has now refined 1.3 million tonnes of sugar from imported raw sugar so far this calendar year which is up 25% from last year after active imports in the spring. Philippine officials may increase their planned additional imports for the current season to near 150,000 tonnes from 100,000 as a previous estimate. The country suffered from El Nino dryness this past season which pulled actual production down to 1.97 million tonnes from the initial forecast for 2.18 million tonnes. The extreme tightness in Thailand and near record cash premiums has caused Indonesia and other importers to turn to Brazil for near-term supply and Brazil sugar is trading at a premium to the board. Eventually, Brazil production may saturate demand but for now, the short-term demand appears supportive.
TODAY’S GUIDANCE: In a somewhat surprising development, India officials indicate that mills have signed deals to import 319,925 tonnes as traders take advantage of lower world values. While India expects production to be above consumption this season, the country may be an importer early this season and an exporter late. The short-term trend looks to remain up.
TODAY’S MARKET IDEAS: Support for October sugar moves up to 15.71 with 16.64 and 17.15 as next upside targets.
Sugar Market Commentary – 2010.06.23
by Terry Roggensack on June 23, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
With a positive demand tone for Brazil sugar and the market still recovering from one of the tightest ending stocks situations in a few decades, the market seems to be in a position short-term to continue to move higher. Traders expect a world production surplus for the coming year but Brazil is the key producer and exporter at the moment and there also seems to be plenty of pent-up demand from end users who tried to avoid high prices last year. The world production surplus is not expected to be burdensome and it will be important to see surging production from India to see the surplus materialize. The market closed slightly lower on the session yesterday but well up from the lows. It was an inside trading session with a relatively tight range. The firm US dollar and ideas that the market is slightly overbought after the surge higher on Monday helped to pressure. News that Egypt made inquiries for 100,000 tonnes of raw sugar was also seen as a factor which might have helped provide some support. Bangladesh bought 10,000 tonnes of sugar at a tender this week. Mexico sugar production for the season so far is running 3% under last year. Russia has now refined 1.3 million tonnes of sugar from imported raw sugar so far this calendar year which is up 25% from last year after active imports in the spring. Philippine officials may increase their planned additional imports for the current season to near 150,000 tonnes from 100,000 as a previous estimate. The country suffered from El Nino dryness this past season which pulled actual production down to 1.97 million tonnes from the initial forecast for 2.18 million tonnes. The extreme tightness in Thailand and near record cash premiums has caused Indonesia and other importers to turn to Brazil for near-term supply and Brazil sugar is trading at a premium to the board. Eventually, Brazil production may saturate demand but for now, the short-term demand appears supportive.
TODAY’S GUIDANCE: In a somewhat surprising development, India officials indicate that mills have signed deals to import 319,925 tonnes as traders take advantage of lower world values. While India expects production to be above consumption this season, the country may be an importer early this season and an exporter late. The short-term trend looks to remain up.
TODAY’S MARKET IDEAS: Support for October sugar moves up to 15.71 with 16.64 and 17.15 as next upside targets.
Tags: Softs, Sugar
About Terry Roggensack