If the supply pressure does not decrease, can white sugar break through the previous high?

　　Since April 2020, commodities V-shaped rebound, under the influence of "carbon neutrality" "carbon peak", energy consumption dual control and other policy regulations, supply and demand side of production capacity is limited, the average increase in bulk commodities reached 80%, as of October 18, the CRB index has approached the 2011 high, led by coal ferroalloys and crude oil led by the energy and chemical departments more eye-catching, agricultural products such as cotton, oil and grease also have an increase of 80%, sugar futures rose only 20%. At present, Zheng Sugar has risen to near 6000 under pressure adjustment, and the sugar market still needs time to digest the inventory pressure.

　　First, the domestic output in the new year was stable and slightly reduced, and the cost of sugar rose

　　On September 20, the first sugar factory in Inner Mongolia was opened, marking the start of Sugar Production in China in 21/22, and at present, beet sugar production is generally normal. Production in sugarcane sugar producing areas such as Yunnan and Guangxi is expected to begin in late October and early November, respectively. The October forecast report of the Ministry of Agriculture and Rural Affairs did not adjust the sugar production in the new year, maintaining the production forecast of 10.31 million tons. As the largest main production area, Guangxi's new year sugar cane intake is expected to increase slightly from the previous crushing season, and it is currently in a period of sugarcane sugar accumulation, and it is necessary to continue to pay attention to the weather in the cane area. According to the pan-sugar science and technology survey, "the price of fertilizer agricultural materials has risen significantly this year, and the cost of sugarcane planting has risen by about 150 yuan / mu." Coupled with the rise in energy prices, the cost of sugar production will increase by at least 200 yuan / ton.

　　Second, the 20/21 year of imports hit a new high, the new year or decline

　　China's sugar production has been insufficient, after the cancellation of the 50% tariff, imports are an important variable affecting domestic supply. In September, China imported 870,000 tons of sugar, an increase of 330,300 tons year-on-year and 366,800 tons month-on-month. In the 20/21 crushing season, a total of 6.3353 million tons of sugar were imported, an increase of 2.57 million tons or 68% year-on-year. In September, the huge amount of imports almost reached the extreme value of last year, which basically met market expectations. Then the sugar supply in 20/21 was 17 million tons, exceeding the demand for the current year (15.5 million tons) by 1.5 million tons. In view of the inversion of import profits in August, import pressure is expected to be alleviated in the late fourth quarter, October is expected to arrive 250,000 tons, 21/22 annual imports or year-on-year decline, according to the Ministry of Agriculture and Rural Affairs in October estimated new annual imports of 4.5 million tons, 21/22 annual supply of 14.81 million tons, will be reduced by 2.19 million tons from the previous year, the new year sugar prices constitute weak support.

　　Third, short-term supply pressure is not reduced, and inventory needs time to go

　　Imports have impacted the sales of domestic sugar, and as of the end of September in 20/21, China's cumulative sales of sugar were 9.618 million tons, a year-on-year decrease of 230,900 tons. Sugar sales in September were flat, only 853,500 tons, an increase of 24,600 tons year-on-year, a decrease of 49,300 tons month-on-month, resulting in the current industrial inventory is still 1,048,600 tons, an increase of 482,400 tons year-on-year, at a high level in the same period of nearly 7 years. As of October 18, there are still 22,587 futures warehouse receipts (including effective forecasts), 16,579 more than the same period last year, and the inventory pressure still needs time to be further dematerialized.

　　Fourth, the high level of raw sugar shock supports import costs

　　As of the end of September, 14% of the sugar enterprises in south-central Brazil have been harvested, and 225 factories are still producing, and the reduction in sugarcane supply has led to many enterprises stopping crushing early, and it is expected that 20% of enterprises will stop crushing in the first half of October. As of the end of September, the total processing of sugarcane in this season reached 467.43 million tons, a cumulative decrease of 6.86% year-on-year; the cumulative sugar production was 29.18 million tons, down 2.87 million tons (a decrease of 8.95%).

　　Recently, energy prices have risen, and ethanol prices have risen more than gasoline, inhibiting domestic ethanol consumption. In September, the central and southern region sold 2.263 billion liters of ethanol, down 11% year-on-year, the second consecutive month of year-on-year sales of ethanol sales fell year-on-year, and the decline in September widened by 9 percentage points, reflecting the decline in competitiveness of ethanol hydrate compared to gasoline affecting consumption. On October 2, the consumer fuel price in São Paulo state showed that the ethanol/gasoline ratio was at a high level of 0.784, and the price comparison continued to rise from the previous week. Consumption of high-valent ethanol (ethanol relative to cost-effectiveness) will continue to be suppressed to some extent, indirectly stimulating sugar production, although Brazilian sugar production is entering the final stage and the impact may be smaller.

　　Exports fell due to production cuts in Brazil, which exported 2.58 million tonnes of sugar and molasses in September, down 1.04 million tonnes (down 23.9%) year-on-year. Cumulative exports of 14.5 million tonnes as of September in the season, down 2.85 million tonnes year-on-year.

　　With the start of the crushing season in the Northern Hemisphere, Indian and Thai exports will become the world's main sources of trade sugar, and Indian sugar exports in the fourth quarter became the main factor affecting raw sugar prices, as the country's new annual production was flat last year, with no major changes. Indian sugar exports depend on the domestic selling price, the current domestic sugar lower spot price of about 32 rupees / kg (equivalent to 19.1 cents / lb), MSP of 31 rupees / kg (equivalent to 18.5 cents / lb), if the price of raw sugar is lower than this price, sugar mills are difficult to export, and then support the price of raw sugar, so the fourth quarter of raw sugar at 18.5-19 cents is supported.

　　Fifth, the pattern of near weak and far strong continues

　　Short-term domestic sugar industry inventory year-on-year high situation continued, september imports of sugar is close to last year's peak, the recent supply pressure is not reduced, still need time to inventory, inhibit the short-term trend of Zheng sugar. October is expected to arrive at the port is less, coupled with the new year's total supply of about 2 million tons less than last year, the internal and external price difference is still inverted, the medium-term sugar prices are supported. Therefore, in the short term, Zheng Sugar is running under pressure near 6100, 5700 support, high throw low suction shock operation. If the import volume in November decreases as scheduled, sugar prices may usher in a turnaround and break through the shock range to strengthen. Arbitrage strategy, the contract will still be near weak and far strong trend, 1-5 anti-set focus on the target level of -130. (Special writer of agricultural products collection and purchase network, author: Wang Wei of Zhongyuan Futures, please indicate the source when reprinting, otherwise you will be held responsible according to law.) ）