Sugar Market Report for 13 December

Good morning,

Friday was not the most exciting day as trading volume dropped again and the market remained virtually within the range of the previous session ending barely changed. The market had opened 3 points lower before quickly slipping another 14 points hitting the lows of the day. However, the support at 19.50 appeared to be in place again as prices soon bounced off the lows. The market quietened for the remainder of the morning getting back to unchanged by mid-day. As US traders got to their desks prices improved pushing up to the day’s highs but started to run into selling above 19.80 which triggered some light day trader liquidation which took prices back to unchanged by the close. The HK slipped a point to end at +39 while the KN dropped 4 points to finish at +43. In London it was equally as quiet. The HK was barely changed at +3.00 while the KQ was weaker at +6.80. The WP finished a tad firmer with HH WP at 76.90 and the KK WP at 82.50. The market remains nervous as the macro continues to dictate market sentiment as the Omicron variant continues to cause new restrictions across the globe.

The COT as of the 7^th December showed that the funds/specs cut their net long position by 10,611 to 130,183. During the period prices dropped to a four month low before improving over 100 points as the market corrected. The non-commercials cut their net long position by 13,169 to 97,930 the lowest net long position since August last year. The commercials cut their net short position by 18,813 to 314471. It would appear that end destination took advantage of the slump in prices to price while trade covered shorts. The Index funds cut their net long position by 8,202 to 184,288. The OI has only marginally increased by 575 lots since the market hit the lows on 2^nd December suggesting the funds have not reinstated any longs despite prices improving over 140 points. The distinctive risk-off mentality prevails.

This morning the market opened 5 points higher before improving another 5 points. Currently, prices are 6-7 points firmer in quiet trading. The HK is a couple of points firmer at +41 while the KN is unchanged at +43. In early London trading the HK is firmer at +4.00 while the KQ is virtually unchanged at +6.90. This morning the macro is a mixed picture with crude higher while grains/soya generally slightly lower and the USD Index firmer. The market remains beholden to the macro but the underlying positive fundamentals are adding support at 19.50 and below. Therefore, more nervous consolidation likely with a slightly up-side bias likely with a test of 20 cents more likely than a collapse below support unless the macro turns negative – which is always possible in these uncertain times.