Jenkins Sugar Group Morning Report

Thursday October 27, 2011

 

JSG Macro Byte

 

The CRB index is up $4.68 to $320.82 and the dollar index has fallen by $0.81 to $75.66. Crude oil has risen $2.56 to $92.76 and gold is down $4.90 to $1717.80.

 

The EU reached a deal today with holders of Greek debt that will cut the face value of the bonds by half, reducing the country’s debt to GDP ratio to 120% over time. The group also agreed to increase the EFSF to an estimated £1-1.4 trillion. This move has lent strong support to the euro and other risk assets, with the currency up more than one percent and equity indices in France and Italy up four percent.

 

The Bank of Japan has extended its credit- and asset-purchase program to ¥55 trillion or $724 billion as the country’s currency has appreciated following global economic uncertainty. However, this expansion was smaller than many economists had predicted, and there are indications that the bank may be forced to expand the program once again.

 

 

Flowchart: Process: JSG Macro Byte  The CRB index is up $4.68 to $320.82 and the dollar index has fallen by $0.81 to $75.66. Crude oil has risen $2.56 to $92.76 and gold is down $4.90 to $1717.80.   The EU reached a deal today with holders of Greek debt that will cut the face value of the bonds by half, reducing the country’s debt to GDP ratio to 120% over time. The group also agreed to increase the EFSF to an estimated £1-1.4 trillion. This move has lent strong support to the euro and other risk assets, with the currency up more than one percent and equity indices in France and Italy up four percent.   The Bank of Japan has extended its credit- and asset-purchase program to ¥55 trillion or $724 billion as the country’s currency has appreciated following global economic uncertainty. However, this expansion was smaller than many economists had predicted, and there are indications that the bank may be forced to expand the program once again.

Chart Points – March 2012 #11

·         10-dayMA: 27.11

·         20-dayMA: 26.28

·         40-dayMA: 26.50

·         50-day MA: 27.02

·         100-day MA: 26.94

·         200-day MA: 25.37

·         Mar. RSI (9): 53.8333

·         Oct 17th high:  28.35

               

Text Box: Chart Points – March 2012 #11 •	10-dayMA: 27.11 •	20-dayMA: 26.28 •	40-dayMA: 26.50 •	50-day MA: 27.02 •	100-day MA: 26.94 •	200-day MA: 25.37 •	Mar. RSI (9): 53.8333 •	Oct 17th high:  28.35                  World sugar futures have followed the momentum caused by the strength of the Euro following talks of a deal reached today with the holders of Greek debt, causing a major pullback in the dollar and thus strong commodities.  March is now 52 ticks higher at 26.87, having traded from 26.65 up to 26.94 to this point and lacking the punch to test recent highs.  May has traded from 25.91 up to 26.15 and last 53 points to the upside at 26.11. Just more than 10,000 contracts have traded between March and May thus far. On spread, the March/May has traded only from 75 up to 79 over and last at 76 points premium.  The May/July has traded from 89 to 78 over and last at 80 points premium.

 

In London, December is $3.80 stronger at $726.40, trading in very light volume off an earlier $722.00 low.  The December/March spread, spurred along by untimely Central American rains, is now valued at $46.00.  The March/March white premium is now around $88.00.

 

According to Credit Suisse, among others, the global sugar market will still end the 2011/12 crop year with a “significant surplus”.

 

As we mentioned last evening, Unica released production figures for Brazil’s center-south region in the first half of October.   The numbers came in as advertised, but a higher than expected ATR figure for the period did serve for some solid discussion. The cane crush in the first-half of October was 10.76% below last year at 23.405 million tonnes, 13.0+ million tonnes less than the second half of September. The total cane crush year to date is now 7.34% behind last year at 436.539 million tonnes. In the most recent period 49.38% of the cane went to sugar production and as a result, sugar production was 16.94% above last year at 1.755 million tonnes. Cumulative sugar production is now 3.08% below last year at 27.732 million tonnes. Ethanol production in the first-half of October (1.106 billion liters) was 12.87% less than last season with anhydrous up just 1.4% and hydrous down 21.06 %. ATR was again the red flag in today’s report. Yield in the past two weeks was 159.40 kilos of total recoverable sugar per tonne of cane (highest this season), up 11.86% from last year. Following a trend where the percentage of this year’s ATR compared to last year seemed to be getting worse, this period’s performance was a bit surprising and possibly explained by September’s cane still mixed into the pipeline of these results.  “The significant increase in that 15-day period surpassed our expectations”, said Antonio de Padua Rodrigues, Unica’s technical director.  However, as we have learned, October’s precipitation in important areas has been concerning and should be better reflected in the second-half of October’s results.  There seems to be very little argument against this crop finishing between 29.5-30.0 million tonnes of sugar. Please see our comparative bi-weekly crush chart below.

 

 

 

 

Domestically, a dryer fire at the American Crystal Sugar plant in Moorhead Thursday morning forced the evacuation of workers. Workers were using skid steers to try to get the burning pulp out of the dryer when fire units arrived just after 4:30. It took about an hour to get the fire under control. Dryer fires aren't all that uncommon, and there have been several this fall at beet factories in the Red River Valley. Also, it appears that the latest round of negotiations between American Crystal Sugar and roughly 1,300 locked-out union workers have not produced an agreement. http://iowaindependent.com/62819/union-american-crystal-sugar-negotiations-falter

 

 

Best Regards,

 

Jeff Dobrydney

Jenkins Sugar Group

203.563.6100

www.jenkinssugar.com

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Frank Jenkins
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