Sugar Market Report for 25 July

Good morning,

Friday saw the market drop again ending near the lows and its lowest level since 6th July. Virtually all the gains seen in early July have now been wiped out on growing global recessional fear and the view that Brazil’s CS will produce at least the same amount of sugar as last season’s 32 million tonnes. The market had opened 7 points firmer on some reasonable market-on-opening buying. However, prices immediately start to weaken with the highs of the day soon in place. The market then slowly but surely slipped lower with virtually no improvement or pause even when 18 cents was reached. The lows of the day were reached late afternoon with support eventually found at below 17.90. This did trigger a small and short lived day trader profit taking but prices soon dropped back to close just 2 points off the lows. The VH actually improved a touch to end 1 point better at -17. However, the HK continued to weaken losing another 5 points to end at +64. In London the flat prices dropped in line with NY with prices ending at their lowest level since late June down $41 from the highs hit just 5 sessions earlier. However, the front spread remains firm with the VZ ending slightly higher at +21.20. However, the ZH was weaker at +7.80. This meant the WP improved slightly with the VV WP finishing at 129.00 and the VZ at 107.80. Friday was the fourth session of large losses as the market reacts to the general macro picture of fears of global recession and a distinct risk-off attitude of the funds. Sugar is also being pressurised by weak BRL and lower fuel prices in Brazil. The latest Unica harvest data for the 1st half July should be released either tomorrow or Wednesday which will give further indication on to whether mills are shifting production to sugar.

The COT report, as of the 19th July, showed their funds/specs had increased their net long position by 30,246 to 40,089 during a week when prices rallied 90 points only to collapse nearly 80 points. This was probably in line with expectations. The non-commercials turned their small net short position into a net long as the gross shorts covered which saw an increase in net longs of 26,047 to 24,987. There was some fresh buying but mainly short covering. However, after the action of the last three sessions the funds are now short again and possibly around the same as at the beginning of the month. The commercials increased their net short position by 26,250 to 241,257 on trade and producer selling when prices pushed above 19.00 cents. There was precious little evidence of any end-user pricing although this is likely to have increased over the past three sessions. The Index funds cut their net long position by 3,996 to 201,168.

A Syrian state agency has issued an International tender to buy around 25k tonnes of raw sugar traders reported this morning. Deadline is not for another month (23rd August) and offers must be submitted in euros.

This morning the market opened 3 points lower and soon broke below the lows of Friday. Currently, prices are 6 points weaker. The VH is 1 point weaker at -18 while the HK is unchanged at +64. In early London trading the VZ and ZH are virtually unchanged at +21.10 and +7.80 respectively. This morning the macro is mixed with crude lower, grains/soya mixed and the USD Index unchanged. The BRL ended unchanged at 5.50. The market continues to look weak with the next target on the downside the double bottom at 17.71/70 (1st month cont.). There would seem a good chance it maybe tested today. It has been exactly a year since prices pushed above 17.50 and has not dropped below this level since. If the Unica data is bearish a test of this level would seem on the cards. The up-side would seem limited but a quick change in the macro and prices could correct quickly with limited selling resting above the market.

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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