Good Morning,

World sugar prices have remained stronger this morning in great volume, despite a stronger dollar based upon the yen softening after new Japanese Finance Minister Naoto Kan said he wanted it to weaken more.  March opened slightly weaker, establishing lows of 28.20 within the first few minutes of action, and has since rallied on a steady basis, eventually to a contract high of 28.95, 54 points higher, following the option open.  March is currently 28 higher at 28.69. May has impressed as well, especially basis spread.  The May has traded from 26.69 to 27.56 and is last 44 points higher at 27.33.  The May/July spread, in good volume, has rallied out to 323 points premium earlier in the session and is last at 296 over.  That spread, since December 9^th, has appreciated 233 points.  The March/May spread has come under a fair amount of pressure, perhaps a pre-cursor to the index fund reweighting starting tomorrow, trading down to 130 over and last now at 138 points premium. 

According to Williams, the Brazilian line-up of sugar ready to be shipped this week totaled  791,245 tonnes, slightly lower than 862,686 tonnes shipped last week.  This week’s line-up appears to include new nominations of 26,362 tonnes heading to Spain and 69,129 tonnes destined for India.  Brazil’s government is likely to reduce the blend anhydrous ethanol in commercial gasoline from its current limit of 25%

India is likely to continue importing white sugar in the next few months, according an industry official, as a ban on importing raw sugar in Uttar Pradesh has delayed processing.  Prakesh Naiknavare, managing director of Maharashtra State Co-op Sugar Factories Federation, believes about 500,000 metric tonnes of white sugar may be imported in the next three months.  Due to the ban, as mentioned yesterday, about 1.3 million tonnes of raw sugar is still lying at various ports. 

In Thailand, raw sugar from the new crop season is beginning to enter the physical market and some mills are reported to be buying back sugar from trade houses as consumer demand in Asia continues.  About 20,000 tonnes of Thai white sugar is destined for Indonesia this month, with some sugar also destined for India, Syria and China.  The country has produced 1.52 million metric tonnes as of December 31^st, up 40% from the same period in the 2008/09 crop year. (17.33 million tonnes of cane, up from 12.31 million last yeatr0  TCSC is going to float a tender on January 14^th to sell 254,500 metric tonnes of raw sugar to be produced this season and next.  According to a TCSC executive, traders should quote their prices against the July New York contract.  Details of the tendered shipments are as follows:

SHIPMENT          J-spec                   Hi-pol

Jul-Sep 2010       24,181                   23,653

Mar-May 2011   67,333                   30,000

May-Jul 2011      79,333                   30,000

In Egypt, according to the Ministry of Trade and Industry, the country’s sugar reserves along with expected production are sufficient for the first half of 2010.  The country is forecast to import one million metric tonnes of raw sugar in the second half of 2010. 

Indonesia has issued permits to eight domestic sugar refiners to import 1.06 million metric tonnes of raw sugar during the first half of 2010, according to an industry official. The county has set a raw sugar import quota of 2.2 million tonnes for this year, with the requirement that the aforementioned 1.06 million tonnes be imported by June. 

Best Regards,

Jeff Dobrydney

JSG