Sugar Market Report for 1 September

Good morning,

The market dropped again yesterday erasing all the gains of Friday as the macro remained distinctly negative. The market had opened 11 points better and soon gained another 4 points but soon headed south leaving the highs of the day in place. Prices continued to weaken soon dropping through the lows of the previous session. Some initial support was found at 18.00 cents but, eventually, this support was eaten into and prices dropped further to hit the day’s lows late afternoon. The market settled weak and at its lowest level since the 23rd August. The VH lost 2 points to end at +12 while the HK continued to weaken losing 3 point to settle at +52 to end at its weakest since 5th July. However, London remains buoyant with the structure and WP improving again. The VZ was marginally higher at +27.80 while the ZH reached +21.00. The WP improved with VV WP settling at 156.40 while the VZ ended also firmer at 128.60. It was another disappointing day for the bulls with the macro weakening again and fresh fundamental news bearish. The market remains above the recent trend line but could soon break lower.

The International Sugar Organisation reported yesterday that they see a global production surplus over demand of 5.6 million tonnes for the coming 2022/23 season reaching 181.9 million tonnes. This compares with a small deficit of 1.3 million tonne for the current season. This is one of the largest surplus estimates so far and is mainly on an increasing total Brazilian production of 38.5 million tonnes and global consumption only increasing by 0.5% to 176.3 million tonnes. The ISO also predict Thai production increasing by nearly 2 million tonnes to 12 million tonnes in 2022/23.

Swiss agritech company Gamaya reported yesterday they see Brazilian sugar production improving over the remainder of the harvest. They said that the first half of the season was poor with the cane developing late due to the dry weather the previous year. They believe sugarcane volumes across the CS should improve over the coming weeks and projected tonnage per hectare to increase by around 13% in the remaining 3.1 million hectares still to be crushed. They expect mills to operate longer this season not finishing until mid-December. They conclude that total CS production could increase by 3% over last year total of 32 million tonnes to around 33 million tonnes.

India received 3.4% more rainfall than average during August according to the IMD. The distribution was not particularly even but most areas have received adequate rains with more to come during early September.

The EU is seeing particularly different sugar beet production estimates due to prolonged draught in some countries. Germany has just released their latest sugar production estimate for 2022/23 at 4.07 million tonnes down by just over 10% from last season. In France Tereos and Cristal Union will start their 2022 beet processing earlier by about a week due to concerns over gas restrictions by the Government this winter if Russia cuts off gas supplies. This, undoubtably, will reduce potential beet yields but preferable to leaving beets in the fields due to factories closing early.

This morning the market opened 3 points lower before slipping further. Currently, prices are 11 points lower. The VH is 3 points weaker at +9 while the HK is unchanged at +52. In early London trading the VZ and ZH are unchanged at +27.80 and +21.00 respectively. The macro is a negative picture again today with most commodities trending lower. The USD Index is firmer while the BRL took a tumble yesterday ending at 5.185 last night. It does seem as case of two markets at the moment with raw sugar under pressure while white sugar remains firm. For the time being raws look likely to remain weak and could drop back to the month lows of 17.61 reached on the 19th August. London will be supportive but, technically, the market looks weak which may encourage further fund selling into only scale-down end-user buying.

Contact the ADMISI Sugar Desk team:

Phone: +44(0) 20 7716 8598

Email: admisi.sugar@admisi.com

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

 A subsidiary of Archer Daniels Midland Company.

 © 2022 ADM Investor Services International Limited.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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