Sugar Market Report for 16 January

Friday saw an inside day as the range virtually mirrored the previous session’s range in quiet trading. The market had opened 4 points firmer before immediately weakening and remaining on the back foot until mid-afternoon when the lows of the day were posted. With support appearing at the same level as the previous day it soon triggered some day-trader short covering which saw prices gain 30 points over the next hour before some selling was found. However, prices pushed up to the day’s highs on the close as more short covering was seen probably because of the impending long weekend with NY closed for holiday on Monday. The HK improved 7 points to close at +132 but remained. For much of the session, within the same range as the previous day. The KN also gained 5 points to finish at +73. In London, the structure strengthen as well with the HK gaining nearly $4 to end at +19.10 while the KQ was also over $1 firmer at +18.90 which meant the WP improved as the HH WP finished at 112.30 and the KK WP at 122.30. It was another day of flat price consolidation around the 19.60 level. Nevertheless, the bulls will be heartened by the spot month strength which is not diminishing and suggests the flat prices could move higher.

The COT, as of the 10th January, showed that the funds/specs had cut their net long position by 42,714 to 159,596. This cut was to be expected as good fund selling had been noted during the period that prices dropped 47 points although did rally 66 points at the end of the reporting period. The non-commercials cut their net longs by 42,911 to 115,080 while the non-reportables did little on a net basis. Given prices have improved further since it is likely they still hold a similar net long position but prices are now above their average buy price. The commercials cut their net short position by 54,219 as end-users priced and the trade covered shorts. The Index funds cut their net long position by 11,504 to 182,182 on the drop of the market.

Due to the Martin Luther King national US holiday the NY market is closed today. Therefore, London will close 1 hour earlier. This morning London gapped higher on its opening on good market on opening buying meeting with very limited selling. The H-23 opened $4.90 higher at 552.20 before improving another $1.60. Currently, the market is $7.40 higher. The HK and KQ are firmer at +19.70 and +19.90 respectively. It is likely to be relatively quiet today. The macro is mixed this morning with crude lower, grains/soya slightly firmer and the USD Index firmer. The BRL remained unchanged on Friday ending at 5.10. It is likely to be relatively quiet today. Chart gap formed below on opening will be the initial downside target (549.40 – 551.80) although, at the moment, the up-side looks more likely to be explored with 559.00 the next up-side target as the buyers are struggling to find any decent selling volume.