Inter-trade raw sugar demand remains steady after record delivery

Santos — A trade of 50,000 mt of VHP sugar, to be loaded in October, FOB Santos, was reported in the secondhand market at a 40 points discount to the front contract March (H) in the ICE NY11 sugar future contract on Oct. 5, a high volume and a small discount, considering the numbers from the October expiry.

On Sept. 30 the market received around 2.6 million mt, almost all from Center-South Brazilian ports, with just 8,500 mt divided between Argentina and Mexico.

Market participants initially estimated that the inter-trade spot demand would remain quiet after the expiry, as most of the potential buyers would be supplied with the sugar delivered at flat; however, the buying appetite seems to remain active.

S&P Global Platts assessed VHP sugar for October loading, FOB Santos at 13.22 cents/lb, up 30 points from the last trading day of the October (V) future contract on Sept. 30. As a comparison, the assessment was 135 points higher than in the same period of the prior year, when just 174,000 mt were delivered in the October expiry.

In addition to the steady demand after the expiry, supporting the arguments of a bullish market, the 40 points discount to the March (H) was considered a high premium as the average of the October/March spread in the last five trading sessions was at minus 47 points.

After the trade, bids remained at H-45 points, against no open sellers in the spot market.

Fundamentals supporting the bulls were attributed to the uncertainties regarding the Indian government decision about the fate of 2020-21 exports, namely the exports subsidy, and the dry weather in the global largest sugar supplier, Center-South Brazil.