Sugar Market Report for 18 November

Good morning,

The market dropped over 50 points yesterday on the expected correction after the near 300 point rally higher. The market opened 16 points lower (leaving a 2 point chart gap) probably on the basis the market had closed slightly lower on the previous session and macro considerations. The market continued to weaken throughout the morning although some support was found below 19.90. However, there was no real improvement seen and prices continued to weaken going into the close with the market settling just 5 points off the lows and whipping out the previous two day’s gains. The HK also saw a bout of profit taking dropping 10 points to end at +111. The KN was also 6 points weaker at +72. In London, the HK improved marginally to +8.10 while the KQ slipped slightly to +17.30. This meant the HH WP improved to 98.40 but the KK dropped over $2 to end at 114.80. A sharp correction was always on the cards after such a rapid rise in prices and it now remains to be seen whether the market can make a recovery or slide further. The funds are now unlikely to add to their longs but probably will not bail out yet.

The Indian Sugar Mills Association (ISMA) reported yesterday that India produced a total of 2 million tonnes of sugar during the first month and half of the harvest which officially started on the 1st October. Although around the same amount produced this time last year it was a solid start and bodes well for the rest of the harvest especially as it was a slow start in some regions due to above rains in October which extended the monsoon. It would suggest that India could produce another 5-6 million tonnes over the next 4 month before reaching the peak of the harvest in March. The confirmation of a good start to the crush may have also suggested more raw sugar could be available for export than previously estimated which lead to the recent rally.

This morning the market gapped lower opening 13 points weaker on some early market selling. However, the chart gap was soon filled. Currently, prices are back to unchanged. So far the HK and KN are unchanged at +111 and +72 respectively. In early London trading, the HK and KQ are around unchanged at +8.20 and +17.40 respectively. The macro is mixed so far this morning with crude slightly firmer and other commodities mixed while the USD Index is virtually unchanged. The BRL ended weaker again yesterday against the USD ending at 5.405. The market continues to correct and could drop further without a serious deterioration in the technical picture. Tonight’s COT will be interesting as it will give a close indication to the funds net long position. The downside target is, probably, the previous double top at 19.43 especially as there is also a 1 point chart gap there as well. If it breaks that level then a drop to 19.00 cents may be seen. Prices could improve as the overall momentum has not been lost as yet although it is unlikely the funds will increase their longs substantially unless prices improve back to the highs.

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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