Hedge funds seen long sugar

Hedge funds and speculators seen going long in the New York sugar futures market according to Commodity Futures Trading Commission.  Longs exceeded shorts by over 52,000 ICE futures contracts.  Overall net long positions increased by 14,965 from last week.  This is while those engaged in the physical growing and processing of sugar and likely to be hedging were short a net total of 46,426 contracts compared with last week which is an increase of over 14%.

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EU white sugar price at 723 Euros

EU white sugar price is 723 Euro/MT almost twice the prices on futures markets.

This is the sugar price within the EU community. The EU reference price stands at 404 Euros/MT.

Brazilian sugar cane and sugar production

Copersucar lowered its forecasts for the Brazilian cane harvest to 580 million tonnes from 595 million tonnes due to frost and higher rainfall.  However, sugar production figures were raised to 33.5 million tonnes from earlier estimates of 32 million tonnes due to a greater switch from ethanol production to sugar as a result of the depressed Brazilian currency.  Copersucar added that returns from sugar production and exports were 10% to 15% higher compared with anhydrous ethanol production.

 

Unica’s forecast for sugar production is 35.5 million tonnes while Canaplan’s latest forecast is 34.5 million tonnes.  So Copersucar may have undershot in its earlier estimates.  Final figures for sugar production in Brazil look likely to be around 34 million tonnes which is a tad lower than last year’s 34.1 million tonnes.

Sao Paulo sugar cane yields rise

Sugar cane yields in the State of Sao Paulo increased to 85.7 tonnes per hectare in the period between April and July which is an increase of 15% compared with last year.

Sucrose content increased by 10% when compared to average July figures.  Sucrose content was 133kg per tonne which is an increase of over 4% from June and over 3.5% compared with last year.

In Cane for Life

The cane cutters of Brazil at work.

Watch here.

An interesting three part documentary on the lives of sugar cane workers in Brazil.

Please click here for parts 2 and 3.

Brazil’s ethanol in demand at the expense of sugar production.

Brazil’s forecast for the 2012/13 cane crush is unchanged at 512 million tonnes of cane and 31 million tonnes of sugar according to Datagro.  These figures are for center south production of between 545 and 575 million tonnes of sugar cane.  The price and demand for gasoline will determine sugar output in the coming season with U.S. demand for ethanol a possible reason for increased ethanol output in Brazil as opposed to sugar.  The U.S. is likely to import 2.5 billion litres of Brazilian ethanol up from 1.5 litres.

Dry weather resulted in Brazil’s 2012/13 sugar forecast being reduced by 1.5 million tonnes in September due to dry weather and lower yields.  Gasoline prices and U.S. demand for ethanol are variables likely to be monitored for further changes to forecasts.  Also being monitored is a possible decision by Brazil to increase the ethanol content in gasoline from 20% to 25%.  This would increase ethanol production at the expense of sugar production.

The increased demand for Brazilian ethanol described above would account for approximately 35 million tonnes of sugar cane. Hence an equivalent reduction in sugar production may be anticipated.

Bunge takes delivery of 500,000 tonnes of sugar

More than 500,000 tonnes of ICE October raw sugar has gone to delivery with Bunge thought to have taken most of the 11,000 plus lots.  The market will wait to see what Bunge intends to do with such a large delivery of sugar and what the destination will be once vessels are nominated.   The move could add further bearish pressure.  October raw sugar closed at an 84 cent discount to March raws indicative of the surplus sugar on the market.