After reaching a 6-week low on August 23, March Sugar rallied 3.84 cents (16%) in less than three weeks. The main source of strength has come from south Asia. India’s August rainfall was 36% below average and the lowest for that month since at least 1901. This is expected to cause problems for their 2023/24 and 2024/25 cane crops. Thailand’s upcoming 2023/24 sugar production is expected to decline 18% from 2022/23, which will result in a sharp decline in exports as well.
While India is unlikely to allow any sugar exports during the 2023/24 marketing year, they were already expected to be out of the export market until at least the second quarter of 2024. Indian government officials have said that they have sufficient sugar supply to cover domestic consumption needs if exports are not allowed. However, they may be considering a sugar stocks holding limit on their retailers and wholesalers, which could free up more supply and weigh on sugar prices.
Brazil’s Center-South sugar production was 4 million tonnes ahead of last season’s pace by mid-August. There have been few harvesting and crushing delays, and mills are keeping sugar’s share of crushing close to 50% despite of high crude oil and gasoline prices. This has Brazil heading for a record sugar export total this season, and that should offset a large portion of the expected declines in exports from India and Thailand.
While overall 2023/24 global sugar exports should decline from the 2022/23 season, there is no reason to expect very tight near-term supply in major consuming nations. Friday’s negative key reversal suggests a near term top is in place.
Source: USDA
—
Originally Published September 8, 2023
Disclosure: The Hightower Report
This report includes information from sources believed to be reliable, but no independent verification has been made, and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the expressed written consent of The Hightower Report is strictly prohibited. The data contained herein is subject to revision; independent verification is recommended. Any third party opinions regarding this report are not necessarily those of the authors. Due to the volatile nature of futures and options markets, the information contained herein may be outdated upon its release.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from The Hightower Report and is being posted with its permission. The views expressed in this material are solely those of the author and/or The Hightower Report and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Futures Trading
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.