Sugar Market Report for 1 August

Friday saw prices slip back after the bounce the previous session off the one year lows. However, it was quieter than of late with trading volume just over 78k lots. The market had opened 9 points firmer and had continued to improve hitting the day’s highs some hour after the opening. However, the buying petered out well before any test of the previous day’s highs was seen. The market then slowly tumbled lower before some support was found just above 17.50 early afternoon. The market then consolidated around this level until the settlement period when some late long liquidation ensured prices closed at the lows of the day. The VH lost 3 points to settle at -15 while the HK ended 4 points weaker at +63. In London the VZ dropped back after the large gains the previous session to end at +29.90 while the ZH was also a tad weaker at +9.70. This meant the VV WP was a tad weaker at 140.50 while the VZ was slightly firmer at 110.60. The market did attempt to consolidate further after the big drops earlier in the week but it was not a particularly convincing performance with a 7% drop seen on the week. The news that Petrobras had lowered gasoline prices again weighed on the market coupled with the better than expected Unica data earlier in the week.

The COT report as of the 26^th July showed a massive change around. The funds/specs cut their net long position by a huge 81,197 to a net short position of 41,108. During the period the market dropped 150 points so the change from net long to net short was expected. The non-commercials went from a net long to net short position of 43,551 as they sold net 68,538. Again this was expected although some will be surprised by the large change. The funds are now back to slightly more than the position they had at the beginning of the month before a sharp short covering rally saw them cover and then go slightly long. Currently, they seem happy to hold the position but may cover if the macro improves. The commercials saw their net short position cut by a massive 87,985 to 153,272 as end-users priced and trade covered shorts. End users will be happy to have increased their pricing cover given they were a little behind. The Index funds cut their net longs by 6,884 to 194,380.

This morning the market opened 4 points higher jumped another 6 points before dropping back. Currently, prices are back to unchanged. The VH is 2 points firmer at -13 while the HJK is unchanged at +63. In London the VZ is slightly weaker at +28.80 while the ZH is unchanged at +9.70. The market appears to be trying to build some support around 17.50. The macro is a negative picture this morning with crude and grains/soya generally lower. However, the USD Index is weaker and down to a near 4 week low. The BRL ended slightly firmer on Friday at 5.17.