MORNING SUGAR REPORT

Tuesday February 11, 2020

WORLD SUGAR #11

World sugar futures have traded slightly higher this morning, but appear to be running into slight resistance on the third day of the index fund roll. March is last two higher at 15.06, trading from 14.99 to 15.12 to this point. May has traded from 14.71 up to 14.82 and is last five higher at 14.78. Fewer than 30,000 lots have traded between March and May to this point. On spread, the March/May has traded from 31 over to 27 over and last at 29 points premium. The May/July has traded from nine over to 12 over and last at 11 over.
SUGAR #11 OPEN INTEREST:
 H0: 342,487 -19,431  K0: 316,177 +10,959  N0: 227,709 +11,702  V0: 169,697 +2,905

TOTAL: 1,233,986 +7,188
 JSG Spec Live Call: +145,500 long  Prices last year: 12.90
SUGAR #11 OPTION WATCH

ATM VOLS: h 15.00 straddle 42-45 vol 25.75 -.20% j 14.75 straddle 90-92 vol 25.07 -.25% k 14.75 straddle 122-124 vol 24.75 -.40% n 14.75 straddle 151-154 vol 22.25 -.15% v 14.75 straddle 182-186 vol 20.35 -.05% Trades of note: 400 h 14.50p live trade 5 500 k 14.50p live trade 46 287 k 14.00p vs 14.80 trade 27
MACRO BYTE
Brazil’s central bank warned that a prolonged coronavirus outbreak may further slow global growth and reiterated the need to observe the impact of its easing cycle on the domestic economy. The bank said that it’s important to observe the effects of the monetary easing cycle started in 2019 and added that there are doubts regarding the strength and timing of its impact.
The U.K. economy narrowly avoided a contraction in the fourth quarter, adding to evidence of a pickup following Boris Johnson’s election win. Gross domestic product was unchanged from the third quarter. December alone saw output rise by 0.30%, which was stronger than expected.
Beijing said regions less hit by the coronavirus should accelerate a resumption of industrial output and President Xi Jinping reportedly warned officials that efforts to contain the virus had gone too far, threatening the country’s economy. The death toll has now exceeded 1,000.











LONDON #5

In London, March, which expires Friday, is last $2.00 higher at $432.00 trading from $429.20 to $432.20 to this point. On spread the March/May is last $0.50 lower at $12.00 premium. The March/March white premium is last at $99.75, up $2.00 on the day.
GLOBAL FUNDAMENTALS
Cash-wise: The JOB Economia Index for sugar in 50kg bags in Sao Paulo is down 1.6% on the week at $304.00 per tonne (13.78). Prices are well above last year’s level. To give this some perspective – futures prices in the #11 are around 15.00 today and last year were around 12.75. The Brazilian Real is last around 4.32, while last year at this time around 3.75. The price equivalent for hydrous ethanol with raw exports FOB is 15.15, which is unchanged on the week and much improved versus levels a year ago. Anhydrous ethanol prices are valued around 15.45, unchanged on the week.



Highlights from Al Khaleej Sugar Conference in Dubai:

 Greenpool has reduced its current year Thai production estimate to 9.55 million tonnes from over 12.0 million tonnes, and sees 2020-21 production of 10.2 million tonnes.   Greenpool revised its global sugar deficit estimate for next season to 3.8 million tonnes from ~1.0 million tonnes.  Alvean is considering the possibility of a Thai crush that could be 77.0-78.0 mmt  Cofco has forecast Thai sugar production at 9.0-10.0 millon tonnes  Cofco expects India to export 4.0 million tonnes of sugar this season  Cofco mills in Brazil expected to crush 17.0 million tonnes if cane this year (15.2 in 19/20)  India has contracted 3.0 million tonnes of exports to date (Cofco)  Indian exports should reach 5.0 million tones according to ISMA  Al Khaleej has been operating at full capacity since late December after a “bad” 2019  Pakistan has banned sugar exports in an effort to control domestic prices






The head of the Indian Sugar Mills Association has suggested that cane farmers will be encouraged by the good rainfall this year which will push up the cultivation area in Maharashtra, Karnataka and Tamil Nadu. As a result, sugar output in 2020/21 could rebound to 30.0 million metric tonnes, compared to 26.0 million mt forecasted in 2019/20, although the monsoon season will be key.

Indonesia might not be able to produce 2.0 million metric tonnes of sugar this year as planned because of the late start of the rainy season, pests and a higher fertilizer cost, according to the Indonesian Sugar Cane Farmers Association (APTRI). Meanwhile, some of the 1.4 million mt of raw sugar authorized for imports in the first semester of 2020 will start arriving next week, according to the Indonesian Refined Sugar Association (AGRI). The overall import quota in 2020 should reach 3.2 million mt, compared to 2.8 million mt last year.
WASDE numbers will be released at noon and will see last week’s short-fall reallocation incorporated into the S&D. It seems reasonable that the recent 100,000-tonne reduction to the official Mexican production estimate will also be adopted, which should make clear that Mexico will be unable to fully meet US import needs.
GLOBAL CURRENCY UPDATE  USD: 98.827 -0.14%  BRL: 4.3136 -0.56%  INR: 71.282 +0.02%  MXN: 18.665 -0.10%


Best Regards,

Jeff Dobrydney Senior Vice President Head of Futures & Options JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. 203.853.3000 www.jsgcom.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.