Mar 24 / Lívea Coda

Sugar Market Trends

"Constant downgrades to India’s and Thailand’s sugar output have driven the market up, helping the May contract reach 20 c/lb. Limited unsold stocks in the Brazilian Center-South and high cash premiums further support short-term prices. India’s production downgrade to 29Mt raises long-term bullish signs, while China’s higher production and closed import arbitrage affect demand in the short-term. The market awaits the new Center-South season and potential price corrections in the medium-term."

Constant downgrades to India’s and Thailand’s sugar output have driven the market up, helping the May contract reach 20 c/lb.
Limited stocks in the Brazilian Center-South further support high cash premiums and short-term prices.
We remain optimistic about Center-South 25/26 crop as the development conditions were better than the ones observed for 24/25 – which is already close to reaching 620Mt.
India’s production downgrade to 29Mt raises long-term bullish signs, with potential support for the Oct/25 and Mar/26 contracts.
China’s higher production and closed import arbitrage affect demand, with potential buying triggered if prices drop below 18c/lb.

Adding to that, the market has been flooded with the idea that Center-South’s 25/26 crop won’t reach the same levels as 24/25, a notion we remain skeptical of. As discussed in our previous report (link), rainfall was better, and other indices such as soil moisture and NDVI also remain higher than during the 24/25 crop development stage. Therefore, if we are heading towards a nearly 620 Mt crushing result for the current season, with better conditions for development, one could expect more raw material coming up in 25/26. This doesn’t mean we don’t expect prices to react in the short term. As previously mentioned, Brazil has little to offer until the new season picks up rhythm, which will possibly happen with some delays. Until then, restricted supply from the country, and worsening prospects in India and Thailand, with some rumors of a possible export ban on the former, should support prices.

Regarding India, it is worth mentioning that, although December and January showed quite healthy results, February brought higher concerns about the country’s availability. We were initially resistant to downgrading our numbers, but given the recent results, we revised sugar production down to 29Mt, considering 3.5Mt of ethanol diversion. This means that at least 600kt will be consumed from the country’s stocks to supply the domestic market, in addition to the 1Mt approved for exports. Market estimates suggest that around 700kt of this volume has already been contracted, with 300kt exported between January and February.

Hence, in terms of trade flows, unless the government decides otherwise, it will be difficult to see any changes coming from the country. The production revision speaks, therefore, more about the next season. If the monsoons develop positively for cane growth, which is crucial for the market to avoid a bullish spree, the fact that stocks were consumed might lead the government to take its time before allowing any sugar exports.

Interestingly, despite lower production estimates, ISMA still reports healthy stocks levels. This is a bit puzzling and is one of the reasons while we limited our revision at 29Mt.

India’s production situation is, therefore, a bullish sign for the long term, possibly adding a bit more support to the Oct/25 contract, but most importantly, to Mar/26. The former, Oct/25, should still be highly influenced by the Brazilian 25/26 output.

On the other side of the equation, demand is showing signs of awakening, pushing up cash premiums and supporting prices. China, for instance, might have found some opportunity at the beginning of March, but with the recent price recovery, its import arbitrage has closed, making the country less inclined to buy.

The main reason is its higher production; China produced 22% more by the end of February, reaching 9.72Mt. Meanwhile, the country imported 50% less, with only 1.5Mt of sugar. It is expected that the import rhythm might pick up once the new Center-South season starts and prices correct a little. However, considering the parity, it would trigger buying if prices drop below 18c/lb.

Constant downgrades to India’s and Thailand’s sugar output have driven the market up, helping the May contract reach 20 c/lb. Limited unsold stocks in the Brazilian Center-South and high cash premiums further support short-term prices. India’s production downgrade to 29Mt raises long-term bullish signs, while China’s higher production and closed import arbitrage affect demand in the short-term. The market awaits the new Center-South season and potential price corrections in the medium-term.

This document has been prepared by Hedgepoint Schweiz AG and its affiliates (“Hedgepoint”) solely for informational and instructional purposes, without intending to create obligations or commitments to third parties. It is not intended to promote or solicit an offer for the sale or purchase of any securities, commodities interests, or investment products. Hedgepoint and its associates expressly disclaim any liability for the use of the information contained herein that directly or indirectly results in any kind of damages. Information is obtained from sources which we believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. The trading of commodities interests, such as futures, options, and swaps, involves substantial risk of loss and may not be suitable for all investors. You should carefully consider wither such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgment and/or consult advisors before entering into any transactions. Hedgepoint does not provide legal, tax or accounting advice and you are responsible for seeking any such advice separately. Hedgepoint Schweiz AG is organized, incorporated, and existing under the laws of Switzerland, is filiated to ARIF, the Association Romande des Intermédiaires Financiers, which is a FINMA-authorized Self-Regulatory Organization. Hedgepoint Commodities LLC is organized, incorporated, and existing under the laws of the USA, and is authorized and regulated by the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA) to act as an Introducing Broker and Commodity Trading Advisor. HedgePoint Global Markets Limited is Regulated by the Dubai Financial Services Authority. The content is directed at Professional Clients and not Retail Clients. Hedgepoint Global Markets PTE. Ltd is organized, incorporated, and existing under the laws of Singapore, exempted from obtaining a financial services license as per the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Act, by the Monetary Authority of Singapore (MAS). Hedgepoint Global Markets DTVM Ltda. is authorized and regulated in Brazil by the Central Bank of Brazil (BCB) and the Brazilian Securities Commission (CVM). Hedgepoint Serviços Ltda. is organized, incorporated, and existing under the laws of Brazil. Hedgepoint Global Markets S.A. is organized, incorporated, and existing under the laws of Uruguay. In case of questions not resolved by the first instance of customer contact (client.services@Hedgepointglobal.com), please contact internal ombudsman channel (ombudsman@hedgepointglobal.com – global or ouvidoria@hedgepointglobal.com – Brazil only) or call 0800-8788408 (Brazil only). Integrity, ethics, and transparency are values that guide our culture. To further strengthen our practices, Hedgepoint has a whistleblower channel for employees and third-parties by e-mail ethicline@hedgepointglobal.com or forms Ethic Line – Hedgepoint Global Markets. “HedgePoint” and the “HedgePoint” logo are marks for the exclusive use of HedgePoint and/or its affiliates. Use or reproduction is prohibited, unless expressly authorized by HedgePoint. Furthermore, the use of any other marks in this document has been authorized for identification purposes only. It does not, therefore, imply any rights of HedgePoint in these marks or imply endorsement, association or seal by the owners of these marks with HedgePoint or its affiliates.

This page has been prepared by Hedgepoint Schweiz AG and its affiliates (“Hedgepoint”) solely for informational and instructional purposes, without the purpose of instituting obligations or commitments to third parties, nor is it intended to promote an offer, or solicitation of an offer of sale or purchase relating to any securities, commodities interests or investment products. Hedgepoint and its associates expressly disclaim any use of the information contained herein that directly or indirectly result in damages or damages of any kind. Information is obtained from sources which we believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. The trading of commodities interests such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors. You should carefully consider wither such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgement and/or advisors before entering in any transaction.Hedgepoint does not provide legal, tax or accounting advice and you are responsible for seeking any such advice separately.Hedgepoint Schweiz AG is organized, incorporated, and existing under the laws of Switzerland, is filiated to ARIF, the Association Romande des Intermédiaires Financiers, which is a FINMA-authorized Self-Regulatory Organization. Hedgepoint Commodities LLC is organized, incorporated, and existing under the laws of the USA, and is authorized and regulated by the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA) to act as an Introducing Broker and Commodity Trading Advisor. HedgePoint Global Markets Limited is Regulated by the Dubai Financial Services Authority. The content is directed at Professional Clients and not Retail Clients. Hedgepoint Global Markets PTE. Ltd is organized, incorporated, and existing under the laws of Singapore, exempted from obtaining a financial services license as per the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Act, by the Monetary Authority of Singapore (MAS). Hedgepoint Global Markets DTVM Ltda. is authorized and regulated in Brazil by the Central Bank of Brazil (BCB) and the Brazilian Securities Commission (CVM). Hedgepoint Serviços Ltda. is organized, incorporated, and existing under the laws of Brazil. Hedgepoint Global Markets S.A. is organized, incorporated, and existing under the laws of Uruguay. In case of questions not resolved by the first instance of customer contact (client.services@Hedgepointglobal.com), please contact internal ombudsman channel (ombudsman@hedgepointglobal.com – global or ouvidoria@hedgepointglobal.com – Brazil only) or call 0800-8788408 (Brazil only).Integrity, ethics, and transparency are values that guide our culture. To further strengthen our practices, Hedgepoint has a whistleblower channel for employees and third-parties by e-mail ethicline@hedgepointglobal.com or forms Ethic Line – Hedgepoint Global Markets.Security note: All contacts with customers and partners are conducted exclusively through our domain @hedgepointglobal.com. Do not accept any information, bills, statements or requests from different domains and pay special attention to any variations in letters or spelling, as they may indicate a fraudulent situation.“HedgePoint” and the “HedgePoint” logo are marks for the exclusive use of HedgePoint and/or its affiliates. Use or reproduction is prohibited, unless expressly authorized by HedgePoint. Furthermore, the use of any other marks in this document has been authorized for identification purposes only. It does not, therefore, imply any rights of HedgePoint in these marks or imply endorsement, association or seal by the owners of these marks with HedgePoint or its affiliates.

Sugar Market Trends

Sugar Market Trends

Image 1: Raw Sugar Prices (c/lb)

Image 2: Center South Average - soil moisture in the cane areas (mm in top 0-1.6m soil)

Image 3: Sugar Balance - India (Mt Oct-Sep)

Image 4: Chinese Estimated Import Arbitrage (USD/t)

In Summary

Weekly Report — Sugar

Disclaimer

To access this report, you need to be a subscriber.

Pages

Terms

Contact us