Analyst Insights

• The US could have its largest-ever crop next season, totalling 8.45m metric tonnes.
• This means Mexico’s import quota could reduce to 888k short tons (807k metric tonnes).
• This would be Mexico’s smallest export flow to the USA since the 2009/10 season.

• The net spec position in raw sugar fell last week for the first time since the start of July, dropping 32k lots from 190k to 158k.
• This drop in net position was driven by the cutting of long positions, rather than the opening of new shorts – with the gross spec short, interestingly, also reducing slightly.
• This selling was bought by commercials who were happy to buy as the price weakened below 12c.

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• Indian mills and refiners have exported 5.6m tonnes of sugar out of a 6m tonne export quota this season.
• Mills exported 148k tonnes in August, down from July’s 321k tonne exports.
• Everyone is now waiting for next season’s quota and export subsidy to be announced.

• Main destination of sugar nominated this week was for India – over 100kmt.
• CS saw 515kmt added to raws line-up.
• September has already 2.7mmt nominated.

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• Despite rains disrupting crushing pace this fortnight, cumulative sugar production is 7.9 ahead yoy.
• If dry weather continues, there is a risk of ag. yield decrease for the coming months.
• This could result in a sooner than expected end of the crop.

• With the No.11 futures around the 12c/lb range this week, raw sugar export parity sits well within negative territory; 19c/lb is where we’ll see Indian unsubsidized raws exports for 2020/21 become competitive. 
• The No.5 futures have kept their range this week; USD 485/mt is where we’ll see Indian unsubsidized low-quality exports for 2020/21 become competitive. 
• The USD/INR FX has strengthened this week and reduced the attractiveness of exports. 

Daily Market Price Update and Commentary 10th September 2020

• White sugar prices continued to decline over the last two weeks and now sit at $352/mt.
• The white sugar market will remain oversupplied as India has produced too much sugar and will need a 6-7m tonne subsidy to export

• This is larger than any quota we’ve seen previously and has been negatively received by the market.

• Global sugar production will total 176.7m tonnes in 2020/21, up 14.3m tonnes year-on-year and almost identical to that of 2018/19.
• Even with the COVID-induced fall in consumption, the world will still produce 5m tonnes more sugar than it consumes, meaning stocks will rise throughout the 2020/21 season.