SUGAR: Key Reversal From Extreme Overbought; Long Liquidation Threat
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With prices at 11-year highs and at extreme overbought levels, the sugar market was especially vulnerable to a near-term pullback. The key reversal with a big range is a bearish technical development. Stronger energy markets provided sugar prices with early carryover support. The Brazilian trade group Unica released their Center-South supply report for the second half of March, which also reflected the region's full-season 2022/23 totals. The Center-South cane crush came in at 4.386 million tonnes, which was lower than trade forecasts expecting 5 million tonnes.
However, this was 271% above the comparable period last year as many mills have restarted their operations earlier than normal. Sugar's share of crushing was 33.4% which is below their 2022/23 full-season share of 45.8%, but compares to an 11.0% share in late March of 2022. Center-South domestic ethanol sales during March came in at 2.075 billion liters which was 12.7% below last year's total and the first year-over-year monthly decline since July.
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Weather delays may account for the lower than expected Center-South crush, which means that additional cane may be processed during April and boost their near-term supply. Near-term resistance for July sugar is at 23.91, with support back at 22.51.