Sugar Market Report for 24 January

Good morning,

The market slipped lower on Friday as some long liquidation was seen on back of negative macro picture. However, prices managed to recover to just below unchanged by close. The market had opened 11-12 points weaker before swiftly dropping another 10 points soon hitting the lows of the day.. The market then settled into a quiet range for the rest of the morning. As US traders got to their desks prices started to improve gaining 30 points to reach the highs of the day early afternoon. However, the buying petered out well before any attempt on the previous highs was mounted with prices quickly dropping back to under 19.00 cents. The market then became becalm remaining within a 12 point range through to settlement when some late day-trader short covering saw prices improve 10 points but settlement was still in the negative column. The HK improved 4 points to end at +30 while the KN ended 1 point weaker at +23. In London the HK was a little firmer at +7.90 while the KQ was a tad lower at +5.80. However, the WP slipped lower again with HH WP ending marginally lower at 88.70 and the KK WP at 87.40. The macro’s weakness on Friday prompted some further long liquidation after the rally had stalled the previous session just shy of 19.30 and some are questioning whether the highs for the move are now in place.

The COT as of the 18th January showed that the funds/specs had increased their net long position by 10,851 to 61,708 following the very heavy liquidation seen the previous week. The increase was expected as the market improved 68 points during the shortened trading week. The non-commercials increased their net long position by 8,599 to 46,667 as the gross shorts covered trades from the previous week. The commercials increased their net shorts by 4,068 to 234,203 with trade on both sides. The Index funds cut their net longs by 6,822 to 172,496.

It was reported this morning that Egypt’s Delta Sugar company is believed to have cancelled an international tender to buy up to 80k tonnes of raw cane sugar. The recent improvement in prices probably being the main reason for no purchase being made.

This morning the market opened 6 points weaker despite a positive macro picture and perhaps because of the poor performance on Friday. Nevertheless, prices soon recovered from the opening weakness and are, currently, trading 4-5 points firmer. The HK and KN are both firmer at +33 and +25 respectively. In early London trading the HK and KQ are unchanged at +7.90 and +5.80 respectively. As mentioned the macro is relatively positive this morning with crude firmer while rest of commodities mixed to slightly firmer. The USD Index is slightly higher while the BRL ended unchanged on Friday at 5.46. The market looks likely to try to consolidate after rallying just shy of 170 points from the low reached on the 10th January last week. Resistance appears above 19.30 with buying seen at 18.70 and below.