Summary
Sugar has broken out. No.11 has rallied to around 20.78 c/lb, pushing through 20 c/lb much quicker than we expected as the issues we have been watching all came together at once. Brazil is the big story: more rain means more lost harvest days, disrupted mills and lower sugar concentration, with around 35 MMT of cane potentially left in the ground. The sugar mix cannot work if the cane does not get to the mills.
Add the Brazilian election, a 4% rally in the real, and a global weather picture where Brazil is too wet and India and Thailand too dry, and the market has plenty to price in. Our short-term view has shifted more bullish and our long-term bull view holds. Now we watch whether 19 c/lb becomes the new floor.
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