GSX Monthly Sugar Report - Free Package

October gave the market the catalyst it needed to push prices above the 20 c/lb level. Throughout the month prices skyrocketed to a high of 21.29 c/lb, before retracing and losing most of those gains by the end of the month, settling on October 30 at 19.36 c/lb. It was a weather-driven joyride, followed later in the month by a Brazilian election ‘aeroplane crash’…

We can see that the support levels below are ones we are watching and the chart itself does not look good. We are very cautious of the 17.80-18.00 level and if that is broken, there is minimal support through to around 16.80-17.20 c/lb (the blue-box range).

Both 30-day and 90-day MAs are tracing down and the 30-day has crossed over the 90-day, indicating a downward trend to follow. Although these are backward-looking, they are still somewhat predictive as to where price can head.

The supply side fundamentals worsened throughout October and there has been chatter that farmers who hedged out the curve may have begun to realise they are over-hedged against a declining production outlook. Weather has had serious implications and, ‘weather’ or not you like it, El Nino has certainly made its presence felt in October.

Our long-term view remains bullish for sugar prices, although the short term has become more difficult. The election unwind, the broader Ag trade coming off and the possibility of year end fund liquidation could keep prices steady and even trade lower. This is despite the fundamentals becoming more supportive of a tighter balance sheet.

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