Jenkins Sugar Group Morning World Sugar Update

Thursday January 21, 2010

 

Good Morning:

 

World sugar futures have again made new highs this morning, trading in impressive volume and against a dollar which continues to rally.  March soared to 29.82 after the option pit opened, 71 points higher, while London’s March contracts established new highs up to 767.00, 17.00 higher.  May has traded in a range of 27.73 to 28.55, and last 72 points higher at 28.50.  On spread, the March/May has traded from 145 into 121 and last at 125 points premium.  The May/July continues to impress, trading out to 386 points premium and last at 368 over in moderate volume. 

 

According to Williams, the Brazilian line-up of sugar ready to be shipped this week totaled 605,191 tonnes, lower than 704,695 tonnes shipped last week.  This week’s line-up appears to include new nominations of 51,650 tonnes headed to India and 28,500 tonnes destined for Morocco.

 

India’s sugar inventory was at 2.4 million tonnes on December 1^st, according to industry sources (just over one-month’s consumption) down from nine million tonnes from a year earlier. 

 

Indonesia’s three state plantation firms did not receive the minimum number of bids required in today’s white sugar tender to import 181,000 tonnes held over the last two tenders.  Another tender is scheduled to be held next Tuesday.  The tender is part of the country’s plan to buy a total of 500,000 tonnes of white sugar for household consumption. 

 

In Pakistan, private traders may quickly import 750,000 tonnes of white sugar after the government has waived taxes this week on private deals transacted before June 1.  The country has certainly struggled to meet domestic demand on forecasts that the 2009/10 crop will fall 1.3 million tonnes short of a 4.3 million tonne demand estimate. 

 

China imported 20,320 metric tonnes of sugar in December, which is 61% lower than the 52,225 tonnes of sugar imported in December 2008.  However, for the year, the country has imported 1.06 million tonnes of sugar – up 36.5% from 2008.  All sugar from state reserves were auctioned off today at an average price below the prevailing cash market price.  More than 365,500 tonnes of sugar was sold at an average price of  US$702.00/tonne, according to the China Merchandise Reserve Management Center.  China has sold around 852,200 tonnes of sugar from its state reserves through three auctions in December and January.  Refined sugar production in December rose 11.2% from a year earlier to 2.682 million metric tonnes.  In 2009, total refined sugar output fell 8.5% to 13.23 million tonnes.   

 

Brussels, as a matter of ‘urgency’ is investigating or continuing to do so, whether Europe can legally breach a World Trade Organization on sugar exports, a move which could land an extra one million metric tonnes onto the market.  Mariann Fischer Boel, the European Union agricultural commissioner has received legal advice on whether, “in these exceptional circumstances”, the region can breach its export limit of 1.37 million tonnes. 

 

The National Cane Sugar Growers Union has revised its forecast for Mexican 2009/10 production down for the second time – now to 4.921 million metric tonnes of semi-refined standard sugar.  The yield of milled sugar per tonne of raw cane had reached 9.79% by the end of week eight, compared to average yields of 10.12% by harvest week eight last year.  They also have forecasted the country will need to import 450,000 tonnes of sugar in the current sugar cycle to rebuild depleted inventories and meet export commitments, quite possibly in large quantity to the US.

 

Domestically, imports under the TRQ totaled 477,535 tonnes through Tuesday. We estimate a shortfall of roughly 150,000 tonnes, which would suggest that the available TRQ is nearly half expended 30 % into the year. Last year, it was mid- to late-March before TRQ arrivals reached today’s levels. Thus a bit more than 3 ½ months in to the year, TRQ arrivals are a full two months ahead of last year.

 

 

 

Best Regards,

 

Jeff Dobrydney

Jenkins Sugar Group

www.jenkinssugar.com