Analyst Insights

• Specs continued to buy the raw sugar market in the week up to the 13th of October, increasing their net long position to 244k lots.
• This buying was matched by commercials, who increased their already massive gross position, with almost 38m tonnes of raw sugar now hedged on the market.
• Prices have steadily risen since the data was captured, suggesting specs are continuing to buy the market.

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• We think Thailand will produce 7.1m tonnes of sugar in 2021.
• This comes as many farmers switched from planting cane to cassava, in search of greater returns.
• This means sugar production will be the lowest in more than a decade.

• The cane molasses prices have been broadly uncompetitive against corn and wheat prices for the last five years, with the molasses price averaging $169/mt (CIF), compared to CBOT corn and wheat prices of $143/mt and $175/mt.
• Molasses is still an important animal feed ingredient, with approximately 56% of the global molasses imports consumed in the feed sector.
• Traditionally, molasses was a low-value substrate with a useful energy content and pelleting properties.

• Thailand has suffered from drought for the past two years.
• Its cane and sugar production have been poor as a result.
• However, new irrigation systems and improved rainfall have increased water availability, so we think production could rebound in 2021/22.

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• Another week of strong nominations, with 780kmt of raws added to CS lineup.
• Still, despite the high volume, waiting time to berth remains low.
• October nominations now stands at 3.5mmt.

• Today, people want to be productive and at the same time feel healthy and well – not just physically, but mentally.
• Diet plays a crucial role in this. It’s obvious that juice today is much more than just a thirst-quencher.
• While health and wellbeing have never been as high on the list of values of global consumers as they are today, the hit list of drinks has also changed dramatically in recent years.

Daily Market Price Update and Commentary 15th October 2020

• Raw sugar export parity remains entrenched in negative territory; 18.6c/lb is where we’ll see unsubsidised raws exports for 2020/21 become competitive.
• The No.5 futures have strengthened slightly since last week; USD 457/mt is where we’ll see unsubsidised low-quality white sugar exports for 2020/21 become competitive.
• The USD/INR FX has remained stable this week, meaning it has no impact on export parity.

• Brazil’s rainfall between April and September was its poorest for 10 years.
• Such conditions were caused by a La Niña event, which reduced rainfall across CS Brazil’s cane fields.
• This meant many producers stopped planting cane, as they could foresee the damage this would do to their agricultural yields.

Daily Market Price Update and Commentary 14th October 2020