Sugar Market Report for 12 December

Friday was another quiet day as the market continued to consolidate. The market opened 5 points firmer in thin trading. Indeed the market spent the next 4 hours stuck in an 11 point range. It was only as US traders got to their desks that activity increased with prices pushing up to the highs of the day. However, the improvement was short-lived with prices slipping back in late trading to end down on the day and near the lows of the day. The HK weakened by 3 points to end at +114 while the KN was 1 point weaker at +68. In London, it was equally as quiet. The HK was a tad firmer at +14.40 while the KQ was virtually unchanged at +19.00. This meant the HH WP was stronger at 109.30 as was the KK WP ending at 120.00. It was virtually an inside day with the market unsure on what direction to take. The large fund position suggests the upside is limited but good support seen at 19.20 and below.

The COT as of the 6th December showed little activity during the reporting period. The funds/specs cut their net long position by just 168 to 161,063 when prices improved from 19.53 to 19.94 before sliding back to 19.36. The non-commercials increased their net longs marginally by 238 to 118,701 but there was precious little activity from the funds. The commercials cut their net short position by 2,659 to 361,557 with the trade on both sides in limited volume. The Index funds cut their net long position by 5,875 to 200,493.

Unica will release their harvest data for the second half of November at 15:00 (London time). It is expected the crush will have been impacted by rain which has curtailed field operations. Nevertheless, total sugar production should have bettered last season’s 32 million tonnes and should creep over 33 million tonnes by end of December – near most estimates.

This morning the market opened 8 points higher but immediately dropped back. Currently, prices are 7 points weaker. HK is 1 point weaker at +113 while the KN is 2 points weaker at +65. In early London trading, the HK and KQ are both around unchanged at +14.40 and +19.00 respectively. The macro is slightly negative with most other commodities trending lower including crude while the USD Index is firmer. The market looks set to remain range-bound. It is likely to be quiet until the Unica data is released. Downside looks limited to around 19.20 while the upside may struggle above 19.90. The macro looks likely to dictate direction for time being.