Sugar #16 Futures Market News and Commentary
October NY world sugar #11 (SBV19) this morning is down -0.07 (-0.58%) and Aug ICE London white sugar #5 (SWQ19) is down -1.00 (-0.34%). Sugar prices are weaker this morning but remain above Monday's lows. Oct NY sugar dropped to a 1-1/2 month low Monday and Aug London sugar slumped to a 10-1/2 year nearest-futures low on demand concerns after a report Monday from the World Health Organization (WHO) said the world's processed baby formulas contain too much sugar and are incorrectly advertised as suitable for infants, which may prompt the makers of baby formulas to use less sugar in their products. Sugar prices were already under pressure on forecasts for widespread rain in India's sugar producing regions over the next week that could boost sugar cane yields. Supplies of sugar are already robust in India, the world's second-largest sugar exporter, after India's Sugar Mills Association (SMA) on July 2 said it sees India's sugar stockpiles at the start of the 2019/20 season at a record 14.5 MMT. Sugar prices have support from reduced sugar output in Brazil, the world's biggest sugar producer, after Unica reported last Wednesday that Brazil's 2019/20 Center-South sugar production through June fell -8.9% y/y to 8.905 MMT. A potential bullish factor for London sugar is last Friday's weekly Commitment of Traders (COT) data that showed funds increased their net short positions of London white sugar by 3,126 contracts in the week ended July 9 to 29,321 contracts, a record short position in data going back to 2011, which increases the threat of a short-covering rally. On the bullish side, India's SMA said on July 1 that India 2019/20 sugar production will fall -14% y/y to a 3-year low of 28.2 MMT due to dry weather.