Recently, domestic sugar factories have entered the late stage of pressing, and new sugar has been listed in large quantities. Zheng Tang's effective station has reached the key pressure level of 5000 yuan/ton, and operates in the range of 5000-5200 yuan/ton. Considering the good expectation of tight supply in the international sugar market in the future and the sales speed of new sugar in China is faster than the same period last year, it is not appropriate to be too pessimistic about Zheng Tang, which has strong support below and limited space for further exploration.

International sugar market is on the tight side

Rabobank on Wednesday predicted a small surplus of 1.1 million tons in the global sugar market in the 2018/2019 squeezing season, a shortfall of 4.3 million tons in the 2019/2020 squeezing season, and a fall in production forecasts for India, Thailand and the European Union, to some extent, pushed up the shortfall.

The latest UNICA biweekly press report shows that in the first half of March 2019 (biweekly), 1591,000 tons of sugar cane were pressed in south-central Brazil, a 53.48% decrease over the same period of last year; 9,000 tons of raw sugar were produced, a 80.95% decrease over the same period of last year; and the biweekly sugar ratio was 6.05%, an increase of 10.48 percentage points over the same period of last year. As of March 16, 566 million tons of sugar cane were squeezed in the middle and south of Brazil in the 2018/2019 squeezing season, down 3.82% from the same period last year; 26.37 million tons of raw sugar were produced, down 26.51% from the same period last year; and the ratio of sugar production was 35.35%, down 11.46% from the same period last year.

Domestic sugar sales are faster than the same period last year

During the sugar-making period of 2018/2019, sugar cane factories have entered the peak production season, and only a few sugar beets are still in operation. By the end of February 2019, the total sugar production in the squeezing season of 2018/2019 was 7.377 million tons, an increase of 0.14% over the same period of last year. Among them, sucrose and beet sugar were 6.678 million tons and 1.298 million tons respectively, compared with 6.2172 million tons and 1.1497 million tons in the last squeezing season.

By the end of February 2019, the cumulative sales of sugar amounted to 3.3798 million tons, an increase of 12.75% over the previous year, and the sugar sales rate was 45.81%, an increase of 5.12 percentage points over the previous year. Sales of sucrose and beet sugar were 26.09 million tons and 778.9 million tons respectively, compared with 2.354 million tons and 643.4 million tons in the previous squeezing season.

In terms of inventory, as of the end of February 2019, 399.74 million tons of new industrial sugar stock had been added, a decrease of 9.11% compared with the same period last year, an increase of 59.23% annually, and the accumulation rate of new sugar stock was significantly slower than that of the same period last year.

Decreased trading activity of white sugar options

On March 27, 14612 white sugar options were traded, with a turnover of 125.384 million yuan, 27.93% and 22.88% less than the previous trading day, respectively. Among them, the volume of call options declined by as much as 40.10%. On March 27, white sugar options held 138240 hands, an increase of 1.25% over the previous trading day. Among them, call options 93430 hands, put options 44810 hands. From the weekly data, the average position on March 27 was 56.01% lower than that on March 20. Among them, put option positions are significantly reduced.

Put options trading activity declined, call options trading activity increased, indicating that the market's short-term pessimism weakened. There was little change in the subscription-to-subscription ratio of daily positions, which basically maintained near 0.48.

In summary, the global sugar market supply was tight in the 2019/2020 squeezing season, and the global sugar market fundamentals reversed. China is at the peak of sucrose pressing, but the sugar sales rate is faster than the same period last year. The support under Zheng Tang is stronger. From the technical point of view, Zheng Sugar 5000 yuan/ton support is still effective, the space for continued decline is limited, and the operation is recommended to meet the shortfall.

Author: Zhou Yun; Source: Futures Daily;