Short Report on Sugar 11 ( 30aprile -May 5)

The Wilmar International Ltd , headquartered in Singapore, but also the largest producer of sugar cane in Australia has called for the delivery of all 16,185 contracts in May. In the days prior to the due date , there has been an interesting activity on the contract due to expire at the end of April : the Wilmar has hoarded sugar May 11 also pushing to 17.50 (and thus the July deadline has passed to the momentum $ 18 ) .
Now we analyze two fundamental questions : why Wilmar , the largest producer of sugar in Australia, has had to resort to the market to purchase additional quantities of sugar?
Hypothesis # 1 : stocks are doing to prevent certain deficiencies of sugar in Australia caused by El Nino ( for Australia, El Nino is usually associated with below average rainfall , with about two-thirds of the events of El Nino from 1900 resulting in severe drought over large areas , "said the Bureau of Meteorology based in Melbourne ) .
Hypothesis no. 2: received orders to meet (imagine by whom) .
Hypothesis 3 : the strong winds of the storm Ita that recently severely damaged the sugar cane plantations have caused what the producers have established a more serious problem : the root has been damaged and the barrels are beginning to fall . Kevin Borg, president of Mackay Canegrowers says that the larvae (parasites ) of sugar cane are the most likely cause (Yellow Canopy Syndrome ).
So Australia, in the guise of Wilmar, by exporting country , has been importing sugar from Brazil (mainly) . At a price that was appropriate ( even beyond the $ 17.50 ) .
Which other company will follow the first example of the forward-looking Wilmar ? First come, first served basis .
It now remains to consider the other side of the coin : why the producers of sugar cane in Brazil have sold Sugar May 11th ?
Days ago I had pointed out a serious problem , which also dealt with Fitch: companies that work the sugar cane in Brazil are at high risk of failure, and not a few have already failed , due to the low price of sugar 11 .Then , you know well that when a company is in a liquidity crisis also agree to immediately sell off in order to achieve the required amounts .
� With the start of the harvest of sugarcane in south-central and urgency of the companies to realize the money to pay the salaries and expenses, the quickest way to recover the money , however, is to sell the product hydrous ethanol . Thus, we have seen a sharp decline in sugar production this first week of May, more than 10 % .
In mid-April I warned you in real time that Brazil had anticipated harvest to reduce the damage of Nino , why , why some of you are surprised to find out about two weeks later, that Brazil last month had a ' excellent production ? The reality is that the country's main centre-south cane belt is limited to anticipate the future harvest , thanks to the complicity of an unusually dry climate extremely favorable to the collection . The positive side is that what has been collected in advance , you can not collect now .
Interestingly, from the total harvest of sugar cane in the first half of April , only 33.28 % was used for the production of sugar , as against 66.72 % for the production of ethanol .
As we anticipated above , this is due to the fact that companies in financial difficulties in Brazil ethanol have preferred to sell on the domestic market because they receive payments faster than export sugar . I remember that allocate more sugar cane for ethanol production is a bullish signal for sugar , as it compromises the supply of the sweetener in the global market .
Other bullish signal is in the fact that the concentration of total recoverable sugars (ATR) per ton of processed raw material was only 103.52 kg in the first half of the month of April 2014. Such a low value of " ATR product " is of concern because is less than the actual content present in plants. There is , therefore , a mismatch between the amount of sugar cane harvesting and the quantity of the products (sugar or ethanol ) formed . In my opinion this could also be due to the fact that the crop was anticipated , as mentioned earlier , do not come to full maturity . It may also have been influenced by the fact that the Brazilian companies has long been that they do not invest (for lack of liquidity and low sales price of sugar 11) in the plantations of sugar cane.
How low this value is also indicated by comparison with the same period (15 April) of the year 2010, when the ATR was well of 121,38 kg .
And so, I hope I have shown , that some seem bearish news , are actually very bullish.
These are just a few reasons which are outside the El Nino event , I am convinced that Sugar 11 will be the best commodity in the medium term .

The True Study Centre

sources:

http://www.reuters.com/article/2014/05/01/sugar-ice-delivery-idUSL2N0NN0NP20140501?rpc=401&feedType=RSS&feedName=rbssConsumerGoodsAndRetailNews&rpc=401

The True Centro Studi

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Wilmar international Ltd

translated from Italian, Errors and omissions excepted