Sugar Market Report
The market dropped back on Friday erasing 50% of the gains since prices bounced off the double bottom at 14.09. However, the volume was a derisory only managing to creep over 52k lots which must be the lowest total volume for years. The market opened unchanged before pushing higher on a positive macro and very weak USD. A couple of hours after the opening prices hit the highs of the day and their highest in a week. However, prices soon started to descend with prices soon dropping through unchanged. The decline continued through to the afternoon when prices hit the day’s lows breaking below the previous day’s lows. Some support was found at 14.40 which stopped the decline and prices bobbed along still above the lows for the remained of the session in a narrow 10 point range. The HK dropped 8 points to +60 while the KN ended unchanged at +29. In London the HK finished unchanged at +6.80 while the KQ was a tad lower at +5.00. This put the HH WP around unchanged at 80.00 while the KK WP was lower at 86.40 but there was limited interest. The market proved its desire to remain range-bound dropping back after three sessions of small gains. The volume suggests most traders are packing up until the New Year.
The COT as of the 15th December showed that the funds/specs had cut their net long position by 16,766 to 195,914. This was during a week that prices improved to above 15 cents before dropping nearly 100 points to put in place the double bottom at 14.09. The non-commercials cut the net long position by 15,557 to 149,148 as they continued to slowly but surely trim their large long position. In the past month they have cut their net longs by just under 53k lots. The commercials cut their net shots by 21,451 to 468,416 as trade cut shorts. The Index funds also cut their net long position by 4,685 to 272,501.
As of the 15th December India has produced 7.38 million tonnes of sugar according to ISMA. This is just over 60% more than the equivalent time last year. This increase emphasises the need for exports so the announcement of the export policy last week was very welcome.
Egypt announced yesterday that they would look to import between 400 and 500k tonnes of sugar during 2021. At the moment imports of sugar are banned apart from exceptions but this ban is likely to be relaxed to a certain extent next year.
This morning the market opened 8 points lower before dropping another 6 points where prices currently remain. The HK is 2 points weaker at +58 while the KN is 1 point weaker at +28. In early London trading the HK is a tad weaker at +6.50 while the KQ is around unchanged at +5.00. The macro is negative this morning and obviously weighing on sugar prices. The USD has jumped higher this morning presumably on the back of the news that many countries are going back into hard lock-down with a resurgence of Covid cases and the realisation that it is going to be a long and hard road back to normality. Sugar looks set to continue to drop and the next target is the double bottom at 14.09 which, if breached, will bring 14 cents into view. Below this level end-user buying should start to show up which could add some support.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
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