Good Morning:

World sugar futures have sagged from earlier highs, producing a quiet session thus far with the majority of trades on an outright basis.  March is currently three points higher at 28.06, having traded as high as 28.34 early on.  May has traded in a 27.04 to 26.61 range, and is now one point lower at 26.77.  Just over 11,000 contracts have traded in the March.  On spread, the March/May has traded from 139 to 126 over and last at 131 points premium.  The May/July has traded from 295 to 279 over and last at 282 points premium.  The past two sessions have certainly been assisted by fund buying of March and May calls, with good interest again yesterday of May calls at 35 and 40 cent strikes and news/rumors of further Indian offtake.  Just a bit of resistance lays ahead between 28.35-28.55, but we feel the market seems geared for another pop higher and into new highs yet again.  March futures have held well against the 10 and 20-day moving averages which reside at 27.64 and 27.09 respectively.    The RSI in March is now at 64.47. 

According to Williams, the Brazilian line-up of sugar ready to be shipped this week totaled  704,695 tonnes, lower than 791,245 tonnes shipped last week.  This week’s line-up appears to include new nominations of 14,600 tonnes headed to Spain, 46,000 tonnes to Algeria, 15,000 tonnes to India and 23,700 tonnes destined to Russia. 

In India, as of Tuesday, Maharashtra mills had produced 2.829 million tonnes of sugar during the ongoing season that began on October 1^st, versus 2.771 million tonnes in the same period in 2008/09.  While the quantity of cane crushed has increased from 25.274 million tonnes to 26.711 million tonnes, sugar recovery has fallen from 10.96% to 10.59%. 

In Thailand, TCSC has sold all of the sugar it planned to sell from the current crop and part of next year’s offer in a tender which concluded today to Bunge and Cargill.  Results below:

SHIPMENT          QUALITY              AMOUNT            PREMIUMS

Jul-Sep ’10          J-spec                   24,181                   +200 over July 2010 #11

                                Hi-pol                    23,653                   +266 over July 2010 #11

Mar-May’11       Hi-pol                    24,000                   flat against March 2011 #11

May-Jul’11          J-spec                   60,000                   +32 over May 2011 #11 

                                Hi-pol                    30,000                   +52 over May 2011 #11

Pakistan plans to import around 50,000 tonnes of sugar and has invited tenders to supply this white sugar need.  Suppliers will have until February 15^th to submit bids.  The country, which is forecast to produce 3-3.2 million tonnes of sugar in the 2010 season, consumes approximately 4.2 million tonnes annually.  The government has allowed Trading Corp. to import around 1.25 million tonnes of refined sugar for the 2010 harvesting season. 

Best Regards,

Jeff Dobrydney

JSG