Sugar Market Report

Good morning,

The market hit fresh 8 month highs yesterday before profit taking saw prices drop over 50 points to close at the lows of the day. The market had opened 3 points firmer where prices stayed for the first couple of hours. Aided by an improving macro picture and a dropping USD speculative buying soon had prices pushing through the double top at 15.04. This triggered a bout of fresh buying which took prices to their highest level since 25^th February when prices were dropping away from the multi-year highs of just shy of 16 cents. Little did traders know at the time that prices would then collapse to nearly 9 cents as the pandemic appeared. Good producer selling was encountered above 15.20 which stalled the advance and, eventually, triggered some speculative long liquidation. Prices quickly lost 40 points before finding some support. However, another bout of selling appeared on the close taking prices down to the lows of the day. Uncertainty over the result of the US Presidential election probably caused the late liquidation. The structure remains firm as traders await news from the Indian government regarding their export policy. The HK slipped 4 points to end at +105 while the KN finished just 2 points weaker at +67. In London the ZH dropped over $1 to finish at -1.90 while the HK was also weaker at +4.00. This put the ZH WP virtually unchanged at 72.30 while the HH WP was firmer at 74.20. The good bounce seen over the past couple of sessions probably ensured prices would climb to a new high but, as expected, producer pricing was waiting and with the funds appetite to add to their longs waning it was not a huge surprise prices slipped to settle around the middle of the range seen recently.

Brazil exported 4.2 million tonnes of sugar during October which was well over twice the 1.92 million tonnes exported last October. This huge increase was expected with Brazil well on the way to producing around 12 million tonnes more than last season.

Production woes continue in Ukraine as sugar production is predicted to drop 15% to around 1.2 million tonnes this season. This is after production fell in 2019/20 by 19% to 1.48 million tonnes. Poor weather and a lower planted area are to main reasons for the continuing drop in production.

This morning the market opened 7 points lower but soon improved quickly pushing into the plus column. Currently, prices are around unchanged. The HK is 1 points weaker at +104 while the KN is unchanged at +67. In London the ZH is weaker again valued around -2.10 while the HK is also valued slightly weaker at +3.80. The macro is overall negative this morning which is hardly surprising given the uncertainly of the US Presidential election with both Trump and Biden claiming victory. Developments in the US are likely to dominate proceedings today which could mean sugar prices remains within the range of the past couple of days with support seen at 14.50 and resistance above 15 cents. However, with the continuing silence from India the structure should remain firm.

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598

Email: admisi.sugar@admisi.com

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