SUGAR REPORT | 26.03.2020 | SUGAR

• Raw sugar rises as crude oil rebounds, coffee also climbs - Reuters - Raw sugar futures on ICE closed up on Tuesday, buoyed by a rebound in crude oil prices, while coffee and cocoa prices were also mostly up. "The market is likely to remain highly correlated with oil prices in the near term. Sugar prices remain above what would be ethanol parity for Brazil’s mills," Commonwealth Bank of Australia said in a note. Brazil's oil company Petrobras cut gasoline prices again on Tuesday, this time by 15%, the third cut since oil prices collapsed on March 9. Oil jumped 3% on Tuesday.

Yesterday, Indian Prime Minister Modi placed his country on a 3-week lockdown.  It means that any India sugar that had already been contracted to come out of the country was cut off from the export chain. The move to the mid-10.00c/lb range already cut off future export flows from places such as India, Russia.  The aftermath was that Brazilian 150s became strongly bid in all cash markets.  There is a lack of refined sugar available as well and the Brazil 150s are now finding homes in places that normally would take low quality refined sugar.  What is interesting about this development is that we are going to begin new crop in Brazil in the next fortnight and it will become a race to see how soon new crop can find its way to the export facilities in Santos and Paranagua. Which brings us to our next point, Brazil is about to see a major upswing in coronavirus’ infections due to lack of Government involvement in getting people to self-isolate. Remember, there is a 2-week lag between exposure and symptoms presenting.  The result is that suddenly, new cases overwhelm the infrastructure and we see a geometric increase in people who are sick. Our point is: do not count on a robust workforce showing up to drive trucks to the ports or harvest cane in the next month. The largest crop projections are only dependent on the productivity of workers to get the actual product to the export market.

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