• The white sugar spreads remain beyond cost of carry for the next year.

Raws Spreads  

• The raw sugar market is oversupplied across all major origins.
• We think that Central American availability is pressuring the V/H spread beyond Brazilian cost of carry.
• The oversupply in Thailand is likely to be carried into 2020 and so should not affect the No.11 spreads.
• Oversupply of Brazilian raws means the 2020 spreads should trade close to cost of carry (15pts per month). 

• To the upside it’s hard to see any No.11 spread trading at a premium for a prolonged period. 

 Whites Spreads 

• The refined sugar market is oversupplied until at least the middle of next year.
• For this reason, we believe the white sugar spreads should incentivise warehousing of sugar at major refined origins. In Thailand and Central America we think this could be close to $3 per month. If India subsidises exports again in 2020, we’d expect the spreads to weaken beyond these cost of carry levels.

• To the upside we think the spreads are unlikely to trade at a premium until the refined sugar surplus is resolved. Watch out for Indian policy around export subsidies – if India cannot export refined sugar in 2020 the spreads will strengthen.

 White Premium 

• The refined market is oversupplied.
• While this is the case it is hard for the white premiums to exceed $70/mt. Above this level re-export refining becomes increasingly profitable, bringing extra unwanted refined sugar to the world market.

• Similarly, we don’t see a reason for the white premiums to trade too far below $50/mt as this doesn’t remove much supply from the market.