Sugar Market Report for 19 July

Good morning,

The market improved again yesterday as the USD dropped but the market ended in the middle of the day’s range in thin trading volume. The market had opened 2 points firmer but quickly gained another 10 points. The market then settled into a narrow 9 point range for the remainder of the morning with support seen at 19.37. As US traders got to their desks prices started to improve hitting the day’s highs mid-afternoon as virtually all commodities reacted to a weakening USD. However, the buying eventually dried up which triggered a bout of day-trader long liquidation which took prices down to the support seen earlier in the day where prices settled. Some late selling during the post-settlement period saw prices drop another 7 points. The VH ended 2 points firmer at -12 as was the HK which finished at +79. London saw a bout of long liquidation in the now spot V-22 after the expiry of the Q-22 on Friday. The VZ dropped nearly $4.70 to finish at +23.20 while the ZH ended at +10.10. This meant the WP weakened with the VV WP at +23.20 and the VZ WP at 90.24. After the USD surged higher last week when the USD index reached its highest level since September 2002 a sizable correction was seen yesterday which saw a near 3% decline from the high hit late last week. This saw virtually all USD commodities improve and sugar was no exception. However, the gains were not huge and less than other commodities (Coffee up nearly 8%) a consequence of not falling as much and the correction in London which had also been a source of support.

The ICE exchange released the official delivery data for Q-22 yesterday. It showed a total of 4,528 lots were delivered. ED&F Man and Sucden were to two receivers while Wilmar, Louis Dreyfus, Parry and Al Khaleej were the deliverers. 2,619 lots were delivered from India (Kakinada and Kandle), 1,487 lots from Thailand (Laemchabang/Sri Racha and Bangkok/Kohsichang) with a small parcel of 422 lots from Jebel Ali in Dubai. While the spot prices expired at a $39 premium it was apparent that some of the sugar delivered was on the basis that the tape was the best buyer and suggests demand maybe waning.

Following Brazil’s Congress’ decision to mandate a tax advantage to biofuels compared with fossil fuels the state governments of Sao Paulo, Minas Gerais and Parana cut the ICMS tax making ethanol more competitive at the pump. While it will reduce the cost of ethanol it is not game changing and is around $0.03 per litre in Sao Paulo and whether it increases the demand for ethanol remains to be seen.

This morning the market opened 10 points lower before recovering slightly. Currently, prices are 6 lower. The VH is 1 points lower at -13 while the HK is also 1 point weaker at +78. In early London trading the VZ and ZH are unchanged at +23.20 and +10.10. The macro is mixed this morning with crude firmer while grains/soya are lower. The USD index is weaker again although it had limited impact on the BRL which ended around unchanged yesterday at 5.42. The market looks likely to remain tightly linked to the macro while other fundamental news is limited. The market looks likely to remain well supported but whether it has the legs to significantly improve further would seem unlikely.

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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