Sugar Market Report

Good morning,

The market saw another good performance on Friday ended only marginally lower despite a very negative macro picture after President Trump tested positive for Covid. The market had opened 6-7 points weaker in line with most other markets and continued to drop losing another 25 points on speculative selling. The market eventually found some support around 13.30 which then saw the market settle into a narrow 10 point trading range through to mid-afternoon when prices started to improve in line with the macro as the markets digested the news about Trump. Prices did sneak into the plus column for a while but late selling trimmed the gains pushing prices back into small losses on the day. The trading volume was poor again only reaching 97k lots on the day. The HK ended 2 weaker at +28 while the KN was 1 point weaker at +31. In London the ZH finished unchanged at -0.50 while the HK was a little weaker at -2.10. This put the ZH WP weaker at 75.00 as was the HH WP at 76.00. The surprise announcement that Trump had tested positive had seen the equity market tumble as traders swiftly took risk off. Sugar was caught up with the turmoil but the losses were limited emphasising the support seen in the market at the moment.

The COT report showed that, as of the 29^th September, the funds/specs had increased their net long position by 21,625 to 200,904. This was in line with expectations. The non-commercials had increased their net longs by 14,390 to 158,938 their largest net long position for several years as they continue to buy pushing prices up to their highest level since early March and at the beginning of the pandemic. It is likely they have bought more since the report date and, currently, stand around 170k lots net long. The commercials increased their net short position by 20,431 to 451,523 as trade liquidated longs. There was precious little evidence of any producer selling although some may have been hit late last week as prices pushed above 13.50. The Index funds trimmed their net long position by 1,195 to 250,619.

As the Indian monsoon comes to an end and the country gears up for their cane harvest farmers will be relieved another rainy season comes to an end with very good rainfall. Overall, the seasonal rainfall this year is at 109% of the long-term average and the third highest in the past 30 years. It is also only the second time of two consecutive seasons with above average rainfall. This all after a relatively dry July which started to concern farmers. However, August turned out to be very wet and made up any deficit in July. It would appear all major cane areas had good rainfall which will help boost the current cane crop as well as lay the foundations for another good season next year.

This morning the market opened unchanged before improving slightly. Currently prices are holding 1-2 points firmer. The HK is 1 point better at +29 while the KN is unchanged at +31. Trading volume is limited so far. In London the ZH is a tad weaker at -0.90 while the HK is also weaker at -2.50. This morning the macro is positive as it appears President Trump is making a recovery from Covid without any complications. Therefore, it is likely further fund buying maybe seen later today if the macro remains positive. There is a double top at 13.77 which, if breached, could trigger further fresh buying. The next target would be 14 cents last seen at the end of February. The market remains well supported as underlined on Friday when the losses were comparatively small given the negative macro picture.

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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