The early tone at the Dubai conference is cautiously bullish with both the representative from the Thai Sugar Millers Association and C0FCO’s representative highlighting the expected reduction in Thai exports due to a lower crop as a result of drought and low cane prices for the farmers. Green Pool cut its forecast for this year’s Thai sugar production to 9.55 MMT from last year’s 14.57 MMT.
The question remains on how much CS Brazil will produce to make up ground and how much of a dent it can make in the projected deficit. At the moment, expectations are that the mix will favour sugar more eventually, but the beginning of the harvest will be as usual concentrated on ethanol production and weather forecasts for a rainy start to operations in March will support this view.
We see no reason to change our outlook. We are now at 15 cents basis March NY with solid inverses in both markets and a strong whites premium. It is not a market to sell into, and we would expect 15.13 resistance to be breached soon and a run towards 15.50 in the medium term.
First news from the Dubai sugar conference are all about Thailand poor season and the World 19/20 Supply and Demand deficit is getting close to 10mmt values, the highest of the past 10 years.