Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
Good morning,
A day of consolidation was seen yesterday as the front spread weakened again. The market had opened unchanged in very thin volume. The market remained very subdued throughout the morning with several attempts to break above unchanged failing. Eventually, as US traders got to their desks prices started to slip further. The lows of the day were reached mid-afternoon but the support, seen the previous day at 14.60, held again with prices soon improving. However, with selling pressure in front two spreads the market settled at a three day low. The HK settled 10 points weaker at +64 over 40 points off the highs seen the previous Monday. The KN was also weaker settling 7 points down at +64. In London the ZH was barely changed at -2.90 as traders roll late position out of the front month in front of the expiry on Friday. The Z-20 OI remains high at 19,434 and with 7,775 lots traded yesterday continuing to suggest around 500k tonnes will be delivered. The HK ended stronger at +3.90. This puts the ZH WP firmer at 75.30 and the HH firmer at 78.20. Another uninspiring day as traders await news from India. The macro did not seem to have much influence on market sentiment which was positive again as the news of a Covid vaccine continues to excite the markets.
Unica will release their second half October harvest data at 14:00 (London time) today. As mentioned yesterday a recent Platts survey see the crush at around 26 million tonnes producing 1.7 million tonnes of sugar. Around 3 days of crushing were lost to rain. Unless the figures are markedly different or the ATR has taken a tumble it is unlikely the release will have much impact on prices.
There has been a huge amount of conjecture on what the Indian Government will do about exports this season. It would appear now that a 6 million tonne target will be put in place. What the monetary subsidy will be remains to be seen but it will need to enough to allow exports. The amount is likely to be lower than last season’s subsidy of 10,448 rupees per tonne but the Government will be aware that any announcement may see prices drop especially as the funds have a large long position – buy the rumour sell the fact?
The Syrian State agency has issued a tender for 85,000 tonnes of white sugar. The closing date is 9th December.
This morning the market opened a couple of points lower before swiftly dropping another 16 points on some market-on-opening selling. Prices have since recovered slightly to just above 14.60. The HK is 1 point better at +65 while the KN is unchanged at +64. In early London trading the ZH is a tad firmer at -2.60 while the HK is unchanged at +3.90. The macro picture is positive again this morning with WTI crude reaching its highest level since the beginning of September. Most other commodities are trending higher with sugar the exception at the moment. The BRL slipped a little yesterday after its recent recovery ending at 5.41 last night. The market is looking tired and further selling pressure may see prices drop further. However, unless the funds decide to liquidate a large percentage of their longs the downside should be limited. However, the highs seen earlier in the month at now well away and there would appear little appetite to revisit for the time being.
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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