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MORNING SUGAR REPORT

Thursday May 14, 2020

WORLD SUGAR #11

World sugar futures have rallied this morning, but perhaps not as much as the market could considering once again the Brazilian currency has made new all-time lows, down 1.2%. July is last 23 higher at 10.49, trading from 10.29 to 10.62 so far. October is last 17 higher at 10.61. More than 90,000 contracts have traded between July and October to this point. On spread, the July/October has traded 17 to 10 under and last at 11 points discount. The October/March has traded from 71 to 66 under and last at 68 points discount.
LONDON SUGAR #5
In London, August is last $11.30 higher at $355.90, trading from $347.60 to $357.80 to this point. On spread, the August/October has traded from $16.50 to $21.10 premium and last at $15.50 premium. The August/July white premium has surged $123.50, up $5.00 on the week.

SUGAR #11 OPEN INTEREST
July 2020: 334,248 -5,533 October 2020: 238,087 +6,240 March 2020: 155,690 +3,102 Total: 963,061
SUGAR #11 OPTION WATCH
m 10.25 straddle 29-33 vol 35.85 n 10.25 straddle 85-89 vol 35.20 unch v 10.50 straddle 154-158 vol 31.90 +.15% h 11.25 straddle 220-230 vol 28.95 unch trade of note: 600 h 13.00/14.75 cs vs 11.35 trades 30


MACRO BYTE
President Donald Trump said he won’t renegotiate his so-called “phase one” trade deal with China, despite the country falling short on agreements to purchase additional U.S. exports. “We’re not going to renegotiate,” he said in an interview with Fox Business Network. While Chinese purchases of U.S. agricultural goods have recently picked up, the Global Times, a Communist Party publication, reported earlier this month that Beijing was weighing voiding or renegotiating the deal.
Brazil’s President Jair Bolsonaro is weighing compromise proposals on public-sector pay aimed at keeping his Economy Minister Paulo Guedes on board without alienating a key voter base. Temporary salary freezes were the one condition imposed by Guedes’ economic team in return for granting 125 billion reais ($21.0 billion) in aid to states and municipalities during the coronavirus crisis.
The number of Americans seeking unemployment benefits remained in the millions for an eighth straight week as the economy continued to reel from the coronavirus pandemic. Initial jobless claims in state programs totaled 2.98 million in the week ended May 9, following 3.18 million the prior week.















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GLOBAL FUNDAMENTALS
Cash-wise: According to Williams SA the Brazilian vessel line-up of raw sugar waiting to load is now 2.682 million tonnes of sugar, which higher on the week, as new nominations have quickly followed the May delivery, and the highest it has been at this time in more than a decade. There are several vessels that will present in Santos that already will wait a month before loading. This compares with 2.564 million tonnes last week and 751,297 tonnes last year. Approximately 175,000 tonnes of sugar shipped on the week. In Maceio, there are now three vessels loading a total of 99,803 tonnes destined for the US. Also please note, there are a total of 45 vessels waiting to load in Santos and currently 33 have not verified their destination according to the Williams report. Please see our attached chart.

Here are the new named nominations:
CANADA 27,989 PARANAGUA PASA REDPATH
ALGERIA 43,000 PARANAGUA PASA SUCDEN
TOTAL: 67,989




In Brazil, Raizen will carry as much ethanol as possible into the off-season, the company's president said. He noted that domestic ethanol sales picking up was not enough to make a difference but that good export demand for ethanol and sugar was helping thanks to the weak Real. Hydrous demand should fall by 18% to below 20.0 billion liters in 2020, according to S&P Global Platts, while ethanol production should drop 13% to 27.5 billion liters. Some 109 distilleries, representing 30% of the country's production capacity, are on the verge of bankruptcy because they cannot produce sugar, according to an economist at Pecege. He explained that producers with ample storage space were renting it out to others, while producers with the weakest cashflow were distress-selling their production. Some mills, meanwhile, are delaying the harvest to avoid having to store too much ethanol.
China expects sugar production from cane and beet should reach 8.96 million tonnes and 1.54 million tonnes respectively in 2020/21, from 8.96 million tonnes and 1.39 million tonnes in 2019/20, the agriculture ministry said. Imports should increase to 3.5 million tonnes as demand will increase to 15.2 million tones, from 3.04 million tonnes and 14.8 million mt in 2019/20 respectively. In Guangxi, the state has launched a 3-year action plan to reduce the production costs of sugar, including promoting mechanized harvesting. It noted that improvements in technology have already led to a yield increase of 20%.

Global sugar consumption is now forecast to fall 1.0% this season, the first drop in nearly 40 years according to Czarnikow Group, due to lockdowns because of the coronavirus. The group has cut is global consumption estimate by 2.0 million tonnes.
GLOBAL CURRENCY UPDATE
• USD: 100.32 +0.23% • BRL: 5.9621 -1.27% • INR: 75.5663 -0.14% • MXN: 24.265 -0.33%


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.

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