Sugar Market Report for 13 June

Good morning,

The market reversed the gain and more of the previous session on Friday as a combination of negative macro and bearish Unica data hit the market. The market had opened 1-2 points firmer before improving slightly to register the high of the day but soon started to fall back as the early buying dried up. Prices slowly slid lower during the rest of the morning but the losses accelerated as US traders got to their desks as US economic data weighed on all markets. Several sell-stops were triggered as prices dropped through 19.10 which swiftly took values below 19 cents. The release of the second half May Unica harvest data added more negative sentiment with prices dropping to the lows of the day. Support was seen as the lows of the two previous sessions were reached with a triple bottom at 18.82/18.84 now in place. The NV improved by a couple of points to end at -22 while the VH lost 4 points to finish at -39. In London it was a quieter session although the spot month continued to fall against the rest of the board after hitting its contract highs earlier in the week. The QV over $5 to end at +21.80 while the VZ was virtually unchanged at +16.30. This meant the WP was little changed with the VV WP ending at 122 while the VZ was at 105.80. It would seem there had been some early views of the Unica data as the market was under pressure from the opening despite a strong performance the previous session. Higher than expected US inflation data was seen as bearish across the commodity spectrum as trader are seen taking a risk-off attitude.

Unica released their 2nd half May harvest data on Friday afternoon. It showed that the total cane crush during the period was 43.69 million tonnes producing 2.31 million tonnes of sugar from a 43.16/56.84 sugar/ethanol split. The actual crush was a tad higher than the same period last year while sugar production was higher than expectations – a Platts survey saw 2.17 million tonnes of sugar produced. The split was more in favour of sugar than expectations and suggests the split may improve further over the coming weeks. It is too early for analysts to revise their production estimates but it does suggest production at around unchanged from last season is possible.

The COT report as of the 7th June showed that the funds/specs had reduced their net long position by 8,907 to 112,716 during a period when prices were volatile but ended the week down some 40 points. The non-commercials cut their net long position by 9,266 to 73,222 as the funds continued to liquidate long they had added as prices rallied to over 20 cents in mid-May. The decline was within expectations. The commercials cut their net shorts by 11,976 to 352,130 as end-users were noted buyers while the trade cut shorts as prices dropped. The Index funds cut their net longs by 3,069 to 239,413.

This morning the market gapped lower on a poor macro picture and weak close on Friday. Currently, the market is 15 points weaker. The NV is 1 point firmer at -19 while the VH is 3 points weaker at -42 now at multi-month lows. In early London trading the QV is firmer at +22.70 while the VZ is barely changed at +16.50. The macro is a very negative picture this morning with all commodities lower apart from corn and wheat which as supported by the Russian/Ukraine war. The USD index is firmer again and is now back near the highs reached in May. The BRL has been hit and closed Friday at 5.00. At the moment the market is unlikely to respond to sugar fundamentals although they are not particularly bullish at the moment. All eyes will remain on the macro which looks decidedly negative. The funds are likely to liquidate more longs but they have a relatively small net long. The gap (18.81/18.84) is the first target on the up-side while some support should be found scale down from 18.70. Nevertheless, the market looks weak and further losses look likely.

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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