Jenkins Sugar Group Morning Report

Thursday, September 30, 2010

World sugar futures have again come under some heavy pressure this morning, but unlike yesterday, the lower levels were achieved following the option opening as opposed to just after the market open. March is now 69 points lower at 24.24, having traded from 24.99 down to 23.95. October, on its expiry day, has traded from 26.82 down to 25.62 and last 82 points lower at 25.95. On spread, the March/May has traded from 190 over into 171 points premium and last at 179 over. The May/July has traded from 212 into 191 points premium and last at 197 over. The October/March has traded from 183 into 150 points premium and last at 167 over. Technically, the 10-day moving average in the March stands at 23.97 and hasn’t settled below the average since mid-August. The RSI has fallen a shade below ‘over-bought’ territory is now 63.66.

According to Williams the Brazilian line-up of sugar ready to be shipped this week totaled 2,898,130 tonnes, including 472,758 tonnes of white sugar, more than least week’s 2,810,762 tonnes. New nominations include 26,657 tonnes to the Black Sea, 33,300 tonnes to Japan, 20,000 tonnes of to Canada, 50,000 tonnes to Iran, 42,500 tonnes destined to Russia, 41,000 tonnes to Saudi Arabia, 44,000 tonnes off to Malaysia and 47,650 tonnes destined to India. Please see attached chart for the last 20 weeks of new destinations.

The Indian government has fixed the quota of sugar for open market sales in October at 1.75 million metric tonnes, including a carryover stock of 100,000 tonnes from last month’s quota. India’s monsoon rains were 37% below normal in the week to September 29th, suggesting the bit extended rainy season is finally drawing to a close. According to the India Meteorological Department, the monsoon has withdrawn from most parts of northwest India. A ban on sugar futures trading was slated to end today – the first contracts to trade will likely be for December or January delivery.

Thailand’s government may require domestic producers to sell more sugar in the local market next year, potentially reducing availability for exports. To meet increasing domestic demand, the government may increase Quota A (amt of sugar producers are required to sell in the domestic market) by 14% to 2.5 million tonnes in the crop year starting November 2010.

As we mentioned in last night’s report, in Mexico, according to the state government in Veracruz, in the wake of the recent storms 1.93 million tonnes of the 15.0 million tonnes of cane originally expected to be crushed in the state have been lost, which should result in a 200,000 tonne loss in sugar production. Reuters reports that, according to unnamed sources in the Mexican government, there are 77,567 tonnes of trade-owned refined sugar in warehouses in Mexico which will be available to help fill the recently announced 100,000 tonne import quota.

JSG Macro Byte

In Germany, the unemployment rate fell to 7.5 percent, its lowest rate in 18 years. These developments have brought the dollar index to an eight-month low of 78.441.

New US claims for jobless benefits fell last week, a bit encouraging as the statistics appear to be trending lower. Initial claims for unemployment fell 16,000 last week to 453,000, according to the Labor Dept.

After reaching a seven-week high yesterday, WTI crude oil has retreated slightly to trade close to $78. Yesterday, Brent crude traded above $80 for the first time since August.

After a positive ECB bank tender the euro has traded to five-month highs basis the dollar. Further, it appears that the European bank may be slowly retreating from ultra-loose monetary policy, in contrast to the U.K., U.S., and Japan.

Domestically, a federal court has ruled that US agriculture regulators again appeared to have acted illegally in allowing the planting of GMO beets. http://www.reuters.com/article/idUSN2911192920100929

Best Regards,

Jeff Dobrydney

Jenkins Sugar Group

203.563.6100

www.jenkinssugar.com

This report has been compiled for general informational purposes only. While every effort has been made to ensure accuracy, Jenkins Sugar Group, Inc. assumes no responsibility for errors and omissions.