Even though oil prices kept declining today on Chinese demand, sugar seems to have a strong case by hanging on to the ethanol parity and a stronger BRL. We saw the front month start the day up by 10 points from last settlement, with thin liquidity. After a push up to the highs at 8am SAO time, steady selling pressure came from the index roll, which eventually led the NY#11 to the daily low at 10:00 am. Rollers and specs fought through a large volume of more than 120k lots and the market traded within a 15pt range, closing at 20.22, 9pts below settlement. It seems clear there is a bullish trend on the short term, even though we see sugar surplus and a boost in sugar and cane yields in the producing regions.
BRL receded once more on the wake of weak CPI data in the US, reaching a low of around 4.62, almost touching our previous 4.58 low earlier in the month. On the LDN 5, as we approach expiry we see a rather high OI and a rebound of the WP, suggesting we might have a strong receiver.
