Sugar Market Report
The markets took a breather yesterday as prices dipped from the fresh 7 ½ month highs hit the previous session. The trading volume also dipped back to the rather uninspiring levels of last week. The market had opened a couple of points lower before swiftly improving as an early push above the previous day’s high was attempted. This quickly failed with prices soon dropping back into the negative column from which it never recovered. Prices continued to slip lower through the morning but interest was limited. Eventually some support was found below 14.60 which saw prices bounce a little but it was pretty half-hearted effort with prices slumping to the lows of the day on the close as light speculative long liquidation was seen. The HK also dropped back losing 6 points on the day to settle at +65 while the KN also ended 6 points weaker at +51. In London the ZH slipped back to a slight discount at -0.30 while the HK ended unchanged at +5.40. This meant the WP also weakened with the ZH WP ending $2 lower at 76.30 and the HH WP also weaker at 75.60. Yesterday’s stalling of the recent rally will have surprised few traders. It was more the case that the fund buying dried up than any significant trade selling appearing. The funds could currently be around 220k lots net long which, as mentioned before, is probably close to their limit given the OI although the total has now improved above 1 million lots for the first time in several months.
The latest sugar tender from Pakistan attracted just one offer according the European traders. Al Khaleej sugar is believed to have submitted an offer of $505 per tonne C&F for the total 50k tonnes of white sugar. Arrival of sugar has to be by 25th November.
The market continues to awaits announcement from Indian government regarding export policy. Chatter is there might be a Cabinet meeting today when some news might emerge…or not. Some have calculated that if the government was to give the same incentive as last season then current NY prices would mean India could sell with a margin. If no help then prices would have to improve, at least, 200 points. Therefore, the market remains on tenterhooks until some pronouncement is made.
This morning the market opened 1 point lower before dropping another 4 points where prices, currently, remain. The HK is a couple of points weaker at +63 while the KN is unchanged at +51. Early trading in London sees the ZH around unchanged at -0.30 while the HK is a tad weaker at +4.90. The market is likely to remain quiet and nervous as traders await news from India. Whether any information is forthcoming today or not until the beginning of next month remains to be seen. It would seem logical for the government to continue with the policy/incentives/subsidies of last season. Despite the pandemic the government is likely to continue to support the sugar industry. Macro is mixed this morning although most agri-commodities are higher while the USD is weaker. Traders will be mindful that a sharp correction could be seen on the back of any Indian chatter especially with the funds heavily long.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities. These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.