Sugar Market Report for 13 September

Good morning,

The market improved again yesterday aided by a very strong spot month in London. However, the market was unable to break, significantly, above 18.50. The market had opened 4 points firmer before slipping lower and hitting the lows of the day mid-morning. From then on the trajectory was higher although the market slipped slightly as US traders got to their desks. However, this was short lived with prices soon reaching the resistance seen just above 18.50 in late August. There is now a triple top (18.51/52). Unable to break higher the market swiftly dropped on liquidation by the day traders. However, prices did improve coming into the close to settle at their highest level since 26th August. The VH improved 1 point to end at +40 having blown out to +56 yesterday afternoon when London jumped to new highs. Concerns over the availability of sugar for delivery is now impacting on NY as well as London. The HK was 2 points better at +47. In London the spot month shot higher hitting fresh contract highs and their highest level since September 2016 as short continue to be forced to cover with a surge of buying noted early afternoon which also impacted on NY. The VZ blow out to +65.80 while the ZH was also firmer at +32.10. The WP, unsurprisingly also pushed up to multiyear highs with VV WP rising to $208.40 by the close. The VZ WP was firmer at 142.60 while the HH WP reached 119.40. It was a day dominated by the whites market. Low destination stocks, lack of exports from India and other producers, lower EU production and higher refining costs have all combined to push prices considerably higher and look likely to improve further before expiry on Thursday.

Unica will release their widely anticipated harvest data for the second half of August at 15:00 (London time today). A S&P Global Commodity Insights poll indicated that the crush for the period should be around 43.9 million tonnes which will produce 3.06 million tonnes of sugar from a sugar/ethanol split of 47.5/52.5%. This time last year the cane started to suffer from the drought conditions and frosts which had hit the cane in July. Therefore, it is expected that this year’s production will now catch up and surpass last year’s total of 32 million tonnes with most now seeing the total reaching 33 million tonnes. Today’s data is likely to help confirm as to whether this will be the case. It is now a question of how much sugar can be produced from the cane available as ethanol parity is now estimated to be around 13.70 after the Brazilian government have consistently cut fuel taxes and, in particular, gasoline.

This morning the market opened 5 points firmer before improving another 5 points. However, the market slipped back and is currently 5 points firmer. In early trading the VH is 2 points firmer at +42 while the HK is unchanged at +47. In early London trading the VZ is a tad weaker (everything is relative) at +63.80 while the ZH is valued around unchanged at +32.50. This morning the macro is mixed with crude and grains higher (soya complex jumped yesterday on bullish USDA data) while the USD Index is lower again. The BRL has gained strength as the USD wanes ending at 5.09 yesterday. The market looks to be well supported with the structure strengthening and London rocketing higher. It would seem likely the triple top will be tested again today. This may trigger some fund short covering as they were around 30k lots net short as of last COT report. It is estimated prices need to push up to above 19 cents to find Indian selling. Despite not having any indication of the Government lifting its export ban mills may take a gamble to sell.

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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