Sugar Market Report for 25 August

Good morning,

The market improved to its highest level in a week yesterday as the macro and Unica buoyed prices but prices eventually settled well off the highs. The market had opened 5 points firmer before gaining another 15 points over the next hour of trading. The market then became becalmed as traders awaited the Unica numbers. Prices did improve as US traders got to their desks but it was not until the release of Unica that the highs of the day were hit when the data was below expectations. However, the buying was fleeting and before long prices were slipping back before support was found at 18 cents with prices eventually settling just above this level. The VH ended at a new recent high of +8 while the HK finished a couple of points lower at +59. In London it was quiet again with the front spread weakening slightly. VZ ended nearly $2 lower at +31.00 while the ZH was virtually unchanged at +14.50. This meant the WP slipped with the VV WP ending at 151.80 and the VZ at 120.80. The initial strength seen was probably a combination of the positive macro with most agricultural commodities improving and anticipation of bullish Unica figures. In the event it appeared to be a case of buy the rumour sell the fact. Nevertheless, if nothing else it has probably added another layer of support.

Unica released their 1st half August harvest data for the CS yesterday afternoon. It showed a total of 38.62 million tonnes of cane was crushed during the period producing 2.63 million tonnes of sugar from a 46.95/53.05 sugar/ethanol split. These figures were below expectation with a S&P survey expecting a crush of 41.4 million tonnes and sugar production at 2.85 million tonnes. It would appear the rain earlier in the month had hampered operations rather more than expected. Nevertheless, it does mean cumulative totals are not catching up significantly over last season. The crush is still over 8% lower year-on-year and sugar production nearly 13% lower (2.74 million tonnes lower). Analysts had been pencilling in total production of 33 million tonnes when the end of July data was released but they may revise. However, it was around this time last year that the harvest started to suffer from the drought and frost damage so it is likely sugar production will start to catch up from now on. With sugar paying significantly better than ethanol total production will be determined by the amount of cane available and how long the harvest continues. It would seem unlikely the 32 million tonnes produced by the CS last season will be bettered.

The Russian Sugar Producers Union sixth sugar beet test since the beginning of the year showed the average root weight has risen to 467 grams from 408 grams this time last year. However, sugar content is just over 1% lower at 15.72%.

This morning the market opened 5 points firmer before improving further. Currently, prices are 10 point higher. The VH is 2 points firmer at +10 while the HK is 1 point better at +60. In early London trading the VZ is firmer at +31.70 as id the ZH at +15.70. The macro is, again, positive this morning with most commodities trending higher and the USD index now 1% lower than the 20 year high hit on Monday. The BRL ended unchanged at 5.11 last night. Some were surprised the gains seen yesterday after the release of the Unica data were not sustained through to the close. This may have because the funds were not particularly active and the days traders had to square up by the close. Nevertheless, the market looks well supported and it would seem prices are more likely to push higher especially if the funds do decide to cover their remaining shorts. The premium seen in the spot month and the strength of London also adding to the positive sentiment.

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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