Santos — The front contract of ICE NY11 sugar futures contract rose 5.07% to settle at 11.82 cents/lb on July 15, after five consecutive sessions of declines.
From the fundamental aspect that has potentially supported the raw future contract rally was the white sugar premium, which moved from the recent lows of $76.14/mt on July 10 to settle at $90.21/mt on July 15, an increase of 5.71% on the day
The white sugar premium is the reference price for sugar refineries, therefore whenever it moves up, the appetite to buy raw sugar can increase.
Despite the higher sugar premium, which was potentially higher on July 15 due to the expiry of the August front contract in the ICE London 5, market participants could not flag any fundamental aspect to support that day on day movement.
Considering the macro aspects both August NYMEX WTI Crude Oil and September ICE Brent futures contracts were up 2.26% and 1.68% respectively. S&P Global Platts assessed Brazilian real at Real 5.3661/$1 at 1330 Houston time, just 0.41% lower on the day, pointing that these were not the main drivers of the sugar rally.
In the physical market the discounts to trade the front months August and September have been increasing since the July ICE NY11 contract expired on June 30.
On June 30, the last trading day of the July (N) future contract, Platts VHP sugar assessments for August and September shipment periods, FOB Santos were at 6 points discount to the July front contract while on July 15 the assessments for the same months were at 24 points discount to the October (V) future contract.
Despite the spike in the future contract on July 15, the Platts assessment for raw sugar front month (August) flat price was at 11.41 cents/lb, down 2.65% from June 30 when the assessment closed at 11.72 cents/lb.