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While there appears to be some reasons to expect fund and spec buying to take sugar prices higher, there is also a growing supply out of Brazil and a limited time horizon for needs from India. Traders believe that India production could recover quickly from the very poor crop of 2008/2009. The market pushed sharply higher on the session yesterday to move to a 7-session high as a surge higher in crude oil, a sharp break in the US dollar and renewed optimism that the world and US economies have bottomed helped to support the market. Talk of bottoming signals in the housing sector and in the auto sector along with ideas that the commodity markets may see some inflation ahead added to the positive tone. News of some import activity from China and ideas that India will need to import sugar were also seen as positive forces. Thailand premiums hit a 3-month high with traders hopeful that China will buy more raw sugar after buying 30,000 tonnes this week. A sugar refiner in India believes the country will need to import near 1 million tonnes in the next eight months. Sugar prices in India are on the rise and this could spark further bookings just ahead. The upside seems somewhat limited by the early start to what appears to be a record crop season out of Brazil. The season started earlier than normal and this is NOT because of strong demand for ethanol or sugar but for the cash flow needs of millers to sell sugar and ethanol. This is not a healthy reason and could be seen as a negative factor for price. In Brazil, ethanol exports for the month of March came in at 157,000 liters from 118,500 in February and 278,800 liters last year. Raw sugar exports in March reached 865,200 tonnes from 940,700 tonnes in February and 578,400 tonnes last year.
TODAY’S GUIDANCE: Fund and spec buyers look more active over the near-term which could support the market but sellers could get more active near 14 cents in July.
