While the Brazil production pace is impressive and helping to keep the market well supplied, ideas that the pace is not sustainable has helped to provide underlying support. October sugar traded as much as 46 higher on the session yesterday before closing 1.4% higher. Sugar continues to find underlying support from the latest UNICA update on the Brazilian sugar harvest, which many analysts feel provides further evidence that the higher-end forecast for this season’s production appear more unlikely. In fact, a major Brazilian sugar and ethanol producer plans to ramp up their sugar production for next season, due in large part to the prospect for global supply deficits. Brazil’s capacity issues were a major reason for the early start to this season’s harvest, and are another factor in why their production is unlikely to come in above 36 million tonnes. Given the problems already seen with India and Thailand, the Asian near-term supply situation is likely to remain fairly tight going forward.
TODAY’S MARKET IDEAS: Support for October sugar remains at 19.55 with some close-in support at 19.96. Any further closes over 20.26 increase the chances of another leg higher to 22.17.