Good Afternoon,

 

The open interest today changed only slightly, indicating specs were not big buyers yesterday.

 

Prices made new contract highs at 29.82, 71 higher, some five hours into the session, as the trade appearing to be behind most of the buying. New contract highs were also seen in May and July but not October forward. The rally was despite the stronger dollar. The rally ran out of buying and prices eased back to 28.73 on mixed profit taking with some “dollar strength” sellers. The dip attracted no spec liquidation and prices bounced back to 29.57. This rally failed completely and March weakened to 28.68, 43 lower, after the settlement and last on the day at 28.81. The March/May traded from 145 to 112 and last at 115 points. The May/July traded from 340 to 386, when prices were close to the highs, and last at 354 points.

The dollar index is unchanged after having been almost 500 higher while the CRB is 200 lower after finding itself 50 higher.   

 

The Brazilian line-up declined by 99,503 tonnes to 605,191 and included a new nomination of 51,650 tonnes to India. This line-up is 180,000 tonnes lower than the line-up at this time last year. The Brazilian trade is talking that the local export market is slow due to lack of availability with nearby sugar bid flat to the tape.

 

Al Khaleej, the Dubai refiner, reported they have enough stocks of raw sugar to keep operating at full capacity through the first quarter despite getting little sugar from Brazil, their prime supplier.  They expect Brazilian sugars to arrive in May as the new crop starts. They further speculated that sugar stocks in Iran and Iraq are very low due to an unwillingness to order sugar.

 

The four Indonesian refiners who tendered today to buy 181,000 tonnes of white sugar only received one offer, less than the three needed to carry out a tender. They cancelled the tender and will retender on the 26^the or they may have to buy via private negotiation. The tender was part of the total Indonesian import permits of 500,000 tonnes of which they have purchased 283,500 tonnes to date.

 

Indian sugar stocks at the start of the year were 5 million tonnes, which is 54.5% lower than last year but up from stocks of 2.4 million tonnes on December 1^st. This low stock figure assisted Indian domestic prices to rally 3% today, breaking a five day decline.

 

The Pakistani government has waived taxes on white sugar imports prior to June 1^st.    This may encourage the private sector to import the up to 750,000 tonnes of white sugar that the government allowed. They are reported to need the sugars to cover the 1.3 million-tonne production shortfall. These purchases are in addition to the TCP tenders spread through February to buy 500,000 tonnes of whites.

 

Today the Chinese government sold 356,500 tonnes of state reserves into their domestic market. The average price of CNY 4,798 was below the prevailing domestic price of about CNY 5,000 but above the price of CNY 4,672 at the last tender. The range of prices was CNY 4,460 to 5,040 indicates there was some poorer quality sugar in the tender. The government has now released 852,300 tonnes to the domestic market during the current crop. Chinese sugar production in December was 11.2% higher than last year but total production for 2009 of 13.229 million tonnes was 8.5% lower. Chinese sugar imports in 2009 were 1.06 million tonnes, 36.5% higher than in 2008 with Cuba supplying 438,000 tonnes and Brazil 235,000 tonnes.

 

There is speculation that Ethiopia bought 60,000 tonnes of whites over the weekend and that Tunisia has bought a cargo of sugar this week.

 

The EU agriculture commission continues to explore the possibility of exporting more than their 1.37 million tonnes allocated by the WTO.  The EU has reported it has more than 800,000 tonnes available to export. 

 

The Mexican National Cane Growers have lowered their 2009-10 sugar production estimate to 4.92 million tonnes due to poorer yields. Previously they had estimated production at five million tonnes compared with 4.96 million tonnes produced from the 2008/09 crop. Meanwhile, Czarnikow forecast the Mexican crop at only 4.75 million tonnes due to wet weather causing low yields. They further noted they envision the government addressing the question of sugar imports no earlier than March.

 

Regards

 

Douglas