Sugar Market Report for 21 December

Good morning,

Prices jumped again yesterday as the front month premium strengthen further amid continuing physical tightness concerns. The market had opened 1 point firmer and immediately moved higher. There was a slight dip as US traders got to their desks but the climb in prices soon resumed with the previous day’s highs soon broken which appeared to trigger further buying which took prices to their highest level since last Thursday. Prices eventually eased back slightly to settle at their highest level since February 2017. The HK improved yet again to settle 15 points firmer at +136 while the KN was 11 points firmer at +94. In London, the structure also improved with the HK gaining over $3 to finish at +21.10 while the KQ was also firmer at +21.10. This meant the WP also improved with the HH WP ending at 110.40 and the KK WP at 119.20. The market continues to improve with the front month leading the way. The funds are increasing their long position and the trade are very cautious in selling. Fundamental news continues to point to increasing production in the major producers but whether this sugar can ease the nearby tightness remains to be seen. At the moment the market appears to believe not.

The Thai harvest is slowly increasing with 33 mills out of 57 already crushing. The cane crush has reached 3.4 million tonnes which is 27% higher year-on-year with the sugar content also good and up by 6.2% so far. Total sugar production has reached 266.7k tonnes which is a third higher than as of the 14th December last season. Total production last season reached 10.13 million tonnes with some analysts forecasting that this season total production could breach 12 million tonnes.

Over the past couple of weeks, the rainfall across Brazil’s CS has been low which will have allowed further crushing of the 2022/23 cane by the mills that are still operating. However, more rain is forecast over the next 10 days which is likely to see most mills cease field operations for the season.

This morning the market opened 7 points firmer but soon improved further. The market is, currently, 22 points firmer having made a new high for the move. The HK is another 9 points firmer at +145 while the KN is 5 points stronger at +99. In early London trading, the structure has improved again. The HK is +23.80 while the KQ is +22.70. The macro is mainly flat this morning with most commodities around unchanged. The USD Index is unchanged while the BRL was firmer yesterday ending at 5.21. There appears to be no stopping the market at the moment as the front month surges higher. It is difficult to know quite the limit of the market at the moment. The funds are in control with many traders reluctant to do anything. Prices look likely to improve further with 21 cents the next target. The market is now suffering from a severe bout of fear and there seems little reason to see any significant pullback in the short term.

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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