Good Afternoon,

Producer selling may have been behind the increase in October’s open interest, reflected by the July/October narrowing yesterday.

Prices early in the session held firm against the stronger dollar, but later succumbed to its pressure, dropping to 13.84.  Along the way sell stops were activated at the 14.09-14.27 gap left from May 1^st 2009.  At that time, the dollar index was 1,000 points higher.  Short covering brought the market back to 14.50, while prices settled at 14.41 before a last trade of 14.29.

The CRB is 350 lower, having been 500 lower, and the dollar index is 650 higher.

The Indian domestic market retained most of the 5% gained over the last six sessions, although today buyers were unprepared to pay higher while sellers held firm.  Government officials reported they will keep a tight control on the domestic market, and apparently seek to encourage domestic prices to rise as millers are able to sell non-levy sugar over a month rather than a week period.  The government will also allow consumers to carry 15 days’ stocks rather than the current ten.  Local newspapers have reported that the government is considering reintroducing 60% import duties on raw sugar.  Holding the view that the Indian market will be self-sufficient next year, the government aims to avoid further imports, which would flood the Indian market.

Mexican sugar millers are reporting their crop to date at 4.294 million tonnes, 7.63% behind last year’s crop to date.  Millers still aim for a total crop of 4.8 million tonnes, 3.25% lower than last year.

Forecasting 60% more cars on the road by and a steadily climbing percentage of those being flex-fuel compatible, EPE in Brazil forecasts ethanol production is expected to rise to 64 billion liters by 2019. Conab estimates the current to lastcrop last week at 28.5 billion liters, a 125% increase.  The weather conditions in the center south of Brazil remain generally favorable for harvesting over the next 10 days although there is a better chance of rain over the week before turning drier again.

Despite not reporting the breakdown of the 200,000 tonne quota increase announced ten days ago, the USDA reports the will continue to monitor domestic sugar supply.

Russian prices remain steady behind production of white sugar from imported raws of 403,400 tonnes, down 29.6% from last year.

Regards,

Douglas