Sugar Market Report for 15 November

Good morning,

The market consolidated on Friday after hitting highest levels in a month the previous session. The market had opened 1-2 points lower before swiftly improving to breach the previous day’s high by a couple of points. However, the early buying soon dried up with prices soon retreating before 20 cents. The market remained quiet slipping a little lower throughout the morning to hit the lows of the day around mid-day. Prices then improved getting back to the earlier highs before prices faded again slipping back towards the lows. Some late speculative short covering saw prices improve but still settled in the negative column but above 20 cents. The HK slipped 2 points to settle at +23 while the KN was also 2 points weaker at +37. In London the soon to expiry Z-21 improved as the ZH over $4 to end at +11.10. The Z-21 OI dropped another 2,404 lots to 10,355 lots with another 4,148 lots traded on Friday suggesting total delivery maybe around 500k tonnes. Latest chatter is that the majority of the sugar likely to be delivered will be Indian with Central and Brazilian in the mix and perhaps the odd stand-alone refiner. The HK also ended firmer at +3.10. This meant the WP improved slightly with HH WP ending at 75.00 while the KK WP was valued at 76.90. After the prices reversal on Thursday a day of consolidation was always likely especially as the macro was negative (apart from coffee which, at one point on Friday, hit its highest level since October 2014.) with crude lower. Nevertheless, most of the gains were held and the technical picture remains positive with a raft of higher lows since 19^th October when prices hit two month lows.

Fresh fundamental news remains scarce. No COT report, due to the Veteran’s holiday, until tonight. The Brazilian CS harvest is rapidly drawing to a close with most estimates for total production now just over 32 million tonnes. However, the India harvest is now getting into top gear and the Thai harvest, which promises to be much better than the last, will start in a couple of weeks’ time. India exports reached just over 7 million tonnes between January and September this year which was the same amount as exported in the whole of 2020. Unsurprisingly, most of the exports went to the Far East and then Middle East and a bit to Bangladesh with freight rates a major consideration. India will be looking to continue to sell to these destinations but will have to compete with Thailand.

This morning the market opened unchanged before improving a touch before slipping back to unchanged. Currently, prices are 3-4 points firmer in thin flat price volume. The HK and KN are both unchanged in early trading at +23 and +37 respectively. In early London trading the ZH is firmer at +13.70 while the HK is a tad lower at +2.80. This morning the macro is generally negative with crude lower and most grains/soya weaker. The USD Index is also a tad lower as well. One gets the impression the market has potential to improve but probably needs help from the macro. The funds seem side-lined at the moment. The Z-21 expiry today looks likely to a quiet and orderly with receivers and deliverers having established positions so unless there is a late and significant change of mind by either party the action is likely to be limited.