A lot happened last month! So much so that we ended up sharing over 100 Opinions on Czapp. With this, we understand you may have missed some things, so we’ve compiled the 10 most popular Opinions from October.
Czapp’s Most Read Opinions in October 2020
October 2020 Raw Sugar Expiry: Two Conspiracy Theories
- The world is oversupplied with raw sugar.
- Three receivers have just taken 2.6m tonnes of raw sugar from the futures exchange at a punchy V/H spread.
- What on earth are they playing at?
Thailand Prepares for Worst Sugar Production in 11 Years
- We think Thailand will produce 7.1m tonnes of sugar in 2021.
- This comes as many farmers switched from planting cane to cassava, in search of greater returns.
- This means sugar production will be the lowest in more than a decade.
October 2020 Sugar Statshot – Third Largest Production on Record
- We think global sugar production will total 176.5m tonnes in 2020/21.
- Whilst this is 14m tonnes higher than production in 2019/20, it remains 12m tonnes lower than the record 2017/18 season.
- Despite this, the world will still have almost 5m tonnes more sugar than it needs in 2020/21.
China Issues More Raw Sugar Import Licenses
- The Chinese government issued more raw sugar import licenses last week; 140k tonnes in total.
- This means 1.59m tonnes of additional licenses have been issued so far this year.
- The volume of raws quotas and AILs could reach 3.5m tonnes, but with import demand above 4m tonnes, refineries may have to carry 1.5m tonnes into 2021.
Strong Rains Mean Thai Cane Could Rebound in 2021/22
- Thailand has suffered from drought for the past two years.
- Its cane and sugar production have been poor as a result.
- However, new irrigation systems and improved rainfall have increased water availability, so we think production could rebound in 2021/22.
Thai Farmers Plant Cassava Instead of Cane (Chart of the Fortnight)
- Thailand should produce 28.3m tonnes of cassava in 2020/21; up 12% year-on-year.
- This comes as many farmers are now planting cassava instead of cane in search of greater returns.
- China’s increased demand for cassava chips also plays a part, as it searches for a cheaper form of animal feed.
Cane Planting Down 20% in CS Brazil (Chart of the Fortnight)
- Brazil’s rainfall between April and September was its poorest for 10 years.
- Such conditions were caused by a La Niña event, which reduced rainfall across CS Brazil’s cane fields.
- This meant many producers stopped planting cane, as they could foresee the damage this would do to their agricultural yields.
CS Brazil – A Record Fortnight with a Pinch of Concern
- We think any cane harvested from here on out will show lower yields.
- With this, the crop could end sooner than expected.
- Production concerns for 2021/22 are apparent.
World Sugar Market 5 Year Forecast
- Sugar remains in a multi-year downtrend.
- We think we’ll see an increasing number of sharp counter-trend rallies in the coming five years.
- COVID-19 will lead to increased pressure on sugar consumption in the longer-term.
Whites Prices Rise as We Await Indian Subsidy (Brief Market Overview)
- We said the whites market would tighten if the Indian government took any longer to award the export subsidy; this is exactly what’s happened.
- India’s government met, failed to discuss both sugar and ethanol, and the white sugar price climbed up towards $379/mt.
- This upward trend could continue for as long as the Indian government takes to reach a decision.
