In August the closing averages of the sugar current spot contract, October/2020, in New York had a behavior of strong volatility in its monthly closing averages for the period, clearly contrasting with the history of falls in annual terms observed in most months of 2020.
SAFRAS & Mercado had already warned about the pattern of reduction in monthly lows in annual comparisons since April this year when the average price of raw sugar in New York was a little more than 20% below the previous year. Since then, this disadvantage has dropped by half since the following month, May, with 10% decreases. In the following months, the levels of decline in annual comparisons have decelerated by half, as in the case of June, with -4%, and July, with -2%. The most recent data, on the other hand, show the inversion of price positioning, already with an advantage of 10% over the same period last year.
However, SAFRAS & Mercado warns that the gains of the October/2020 contract that reinforced this trend have already been saturated in the short term, with the end of August already marked by saturation of the highs of the period at 13.50 cents, with the price level moving towards 12.50 cents. On the fundamental side, it is interesting to note that, despite short-term gains, which are clearly advancing due to statistical load, the situation is not so favorable. In Asia, there is pressure to enter next season with productions again record in traditional growing countries such as India, China, and Thailand, according to data from the most recent USDA’s report.
Moreover, these volumes of recovered crops are preceded by large stocks from the off-season, which leaves the availability of supply with relative comfort. That is why record sales by Brazil between February and May this year keep the shipment flow at record levels with forward sales even for the next season, which already amount to 5 million tons.