Analyst Insights

• Strong spec buying in raw sugar continued in the week up to the 6th of October, with 40k new long positions opened to drive the net spec position to 220k lots.
• The net speculative position is now at 20% of open interest and levels above this have been hard to sustain in the past.
• Both the commercial long and short positions fell considerably as a result of the massive V expiry, where 52k lots were delivered.

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• Cane harvested from now on is expected to show lower yields.
• Crop could end sooner than expected.
• Concerns for 21/22 are also on the table.

• Strong nominations this week and rains in Santos.
• Loading operations had to stop due to weather.
• October nominations now stands at 2.7mmt.

Daily Market Price Update and Commentary 9th October 2020

• We said the whites market would tighten if the Indian government took any longer to award the export subsidy; this is exactly what’s happened.
• India’s government met, failed to discuss both sugar and ethanol, and the white sugar price climbed up towards $379/mt.
• This upward trend could continue for as long as the Indian government takes to reach a decision.

• Even with the No.11 futures breaking past 14c/lb this week, raw export parity remains entrenched in negative territory; 19c/lb is where we’ll see unsubsidised raws exports for 2020/21 become competitive. 
• The No.5 futures have kept their range this week; USD 457/mt is where we’ll see unsubsidised low-quality white exports for 2020/21 become competitive. 
• The USD/INR FX is stable this week and so does not influence the attractiveness of exports. 

Daily Market Price Update and Commentary 7th October 2020

• Mexico’s cane production was badly impacted by drought in 2019/20.
• This meant it was only able to produce very small amounts of sugar, ethanol and molasses.
• However, its molasses production should rebound next season as the weather looks favourable, but it will remain a net ethanol importer.

• Mexico was graced with above average rainfall in August.
• This eliminates the risk of drought and means Mexico’s cane crop should align with historical norms in 2020/21.
• With this, and the reduced US quota, Mexico may export more sugar to the world market next season.

• We expected greater than normal market volatility in the last quarter of 2020.
• It is ladened with geo-political milestones – a US Presidential Election, agreement of a post-Brexit trade deal and early insights about China’s next five-year plan.
• Against this background, President Trump’s positive COVID-19 test and need to quarantine, ahead of a closely watched election is likely to push up on market volatility.

• In the first two reports of this series, we placed Sustainable Agriculture (SA) in a global context and in relation to both global warming and the key greenhouse gases associated specifically with agriculture.
• We now introduce the concept of Sustainable Intensive Agriculture (SIA).
• The series is brought to you by Mark Oulton, former Manager and Trader at Cargill (18 years) and Global Research Manager at SGS (11 years).