Sugar Market Report

Good morning,

We wish all our readers a Happy and Healthy 2021.

The market finished the year on five week highs and only marginally lower than the multi month highs reached in the middle of November. However, the trading volume remained underwhelming. The market finished to year over 15 % higher on the year. The market had opened unchanged but soon pushed higher after the strong close the previous session and continuing positive macro picture. Prices soon pushed above 15.40 where enough resistance was found to trigger some light profit taking. Prices soon slipped below unchanged where they remained until mid-afternoon when a bout of fund buying saw prices push up to new highs for the move. More solid resistance was met at 15.50 which halted the improvement. However, it was a firm close and suggests prices are likely to test the highs of 15.66 before too long. The HK improved 6 points to +81 while the KN ended two points firmer at +49. In London the structure also improved again with the HK ending at +8.60 while the KQ was also firmer at +7.60. The WP was more subdued with limited interest. The HH WP firmed to 79.40 while the KK WP finished at 88.70. The funds, who have over the past few weeks, had been reducing their large long position have been buyers over the past three sessions reinstating longs. The overall positive macro picture and weak USD has been the main driver with most commodities finishing the year at recent highs. Sugar was no exception with the fundamental picture also adding to the bullish sentiment. The delayed COT report (released tonight due to New Year holiday) should show an increase in the net long position of the funds erasing some of the liquidation seen over the past couple of weeks.

There has been no huge change in the fundamental picture in sugar since before Christmas. The Thai harvest is off to a slow and disappointing start but it is too early to put any definitive figures on the total production but looks unlikely to be much better than last season. At present most analysts are seeing a small deficit for 2020/21 but much will depend on Indian production and how much consumption improves. While the pandemic continues to cause hardship and lock-downs across the world it is difficult to see any major resurgence in consumption for the time being.

This morning the market opened 16 points firmer and just shy of the November highs of 15.66 mainly on the back of a positive macro and weaker USD. Currently prices have improved further and have breached the highs. Currently trading +25 points higher at 15.74.  The next target is 15.90 the highs seen back on the 12th February last year. The HK is firmer at +84 as is the KN at +55. In London the HK is firmer at +10.50 and the KQ at +8.50. The combination of a very positive macro picture and a firm close to 2020 has insured a good bout of fresh buying which looks likely to continue. The funds are likely to re-instate further longs and it would not surprise if prices challenged the 16 cent level before long. Producer selling will be found but likely to be limited and very much on a scale-up basis.


Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598



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