Sugar Market Report for 23 August

Good morning,

Yesterday saw an inside day although prices never managed to get into the plus column ending lower on the day after the macro turned negative again. The market had opened 15 points lower mainly on a strong USD. Prices continued to fall as longs were liquidated from Friday when prices rallied on somewhat dubious Conab predictions regarding the CS cane prospects for the rest of the season. Prices did improve back to unchanged by mid-day in thin volume but soon started to sink again during the afternoon as some of the short term funds baled out of longs. Once this was completed and crude had recovered slightly prices regained half the loses on the day to settle at opening levels. The trading volume was limited as prices remained within the range of the past two sessions. The VH dropped 3 points to end at +2 while the HK finished 4 points weaker at +60. In London it was particularly quiet. However, the spot month continued to remain strong with the VZ gaining $2 to settle at +33.30 while the ZH ended virtually unchanged at +13.60. The WP continued to improve with the VV WP ending at 154.00 while the VZ was at 120.70. The macro put the market under pressure from the opening as the USD continued to surge. The bullish 2022/23 harvest data for the CS released by Conab on Friday appeared to be soon forgotten/discounted as inaccurate as the weakness in hydrous ethanol across Brazil was seen as more relevant. The prices has dropped significantly over the past few weeks after Government tax cuts have impacted.

The European Union’s crop monitoring service MARS released their latest crop forecasts yesterday. They have cut expected yields for sugar beet from 77.4 tonnes/hectare to 75.3 tonnes/hectare. There is a wide variation between producers with France still expected to produce more than average while Spain, Italy lower while most other main producers expect average yields. There is still time for things to change but it would seem unlikely there will be a significant improvement in yield.

This morning the market opened 6 points firmer mainly on the back of higher crude prices. Currently, prices are a couple of points firmer. The VH and HK are both unchanged at +2 and +60 respectively. In early London trading the VZ is a tad firmer at +33.40 while the ZH is unchanged at +13.60. This morning the macro is mixed despite the USD Index making a new 20 year high (109.21). The market looks likely to remain within the range seen over the past three sessions. In Brazil ethanol parity is well below current sugar prices so production of sugar across the CS will take priority. However, there is still much debate on how much sugar will be produced. Conab aside, most analysts are confident production can better last season’s 32 million albeit by a small margin. The EU beet crop may suffer further downgrade in yields before harvest. Therefore, India exports will be crucial. The Government has not given any indication to their export policy for next season but many expect initial cap to be 8-10 million tonnes. This sugar will be needed especially early next year. The market will, therefore, eventually, have to find this sugar and prices will need to improve. In the short term, the market looks likely to try to consolidate around current levels although the macro is likely to dictate intra-day direction.

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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