The spec net long was near 220k lots on Friday, 19k lots higher than the previous week. Funds have been buying quite a lot over the last 4 weeks, which has triggered a higher market. Just as a reference, the highest ever spec long recorded was in 2016 with close to 350k lots.

Sugar prices on Friday settled mixed with NY sugar posting a new 7-month nearest-futures high. London sugar fell modestly Friday on strength in the British Pound. GBP/USD climbed to a 1-month high Friday, which undercuts London sugar that is priced in terms of sterling.

Sugar prices have rallied sharply over the past month on concern about future Brazil sugar output. Archer Consulting said last Tuesday that dry weather that sparked fires in Brazil's sugar-cane growing regions could curb Brazil's 2020/21 sugar production by -2.8 MMT. Also, Maxar said that Brazil's sugar-growing regions have only received 5%-25% of normal rain in the past few months, leaving crops "extremely dry." Sugar prices have support by concern a La Nina weather pattern could lead to prolonged excessive dryness in Brazil that cuts sugarcane yields.

Sugar prices are also seeing support from the smaller sugar crop in Thailand, the world's second-biggest sugar exporter, which has been decimated by drought. The Thailand Sugar Mills Corp said last Friday that Thailand's 2020/21 sugar production would fall -13% y/y to an 11-year low of 7.2 MMT as dry weather this year ravaged cane plantations.

The outlook for a smaller sugar crop from the EU is also positive for sugar prices after the USDA's Foreign Agricultural Services (FAS) on Tuesday forecast EU 2020/21 sugar production will fall -5.6% y/y to 16.05 MMT due to poor yields from the third "vast drought" in a row.

Sugar prices also garnered support after China on Friday raised its 2019/20 sugar import estimate. According to the China Agricultural Supply and Demand Estimates (CASDE), China will import 3.5 MMT of sugar in 2019/20, up +15% from a prior estimate of 3.04 MMT.

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