Sugar Market Report for 27 July

Good morning,

Yesterday saw a volatile session as the market tried to find some support after dropping over 200 points in just 6 sessions. The market had opened 11 points higher on a positive macro picture. Prices immediately improved gaining another 24 points in the first 10 minutes of the session. However, this proved to be the high of the day as the market soon started to fall gradually eroding the earlier gains and falling to a new one year low mid-afternoon. There was some sign of the selling drying up which enabled prices to pull off the lows by the close with the market ending around unchanged. The VH improved 1 point to settle at -18 while the HK gained 6 points to finish at +65. In London the structure weakened slightly with the VZ ending at +20.40 and the ZH at +6.60. This meant the WP also slipped lower with the VV WP at 124.90 and the VZ at 104.50. The market remains weak unable to hold on to the early gains. However, there was some signs of more fresh buying emerging. The previous session the OI increased by over 19k lots and an further increase is expected today. The funds are now short again. Recently, they have shown a reluctance to hold shorts for any length of time and may well cover if the market looks to have found a bottom.

Unica will release their harvest data for the first half of July at 15:00 today (London time). Expectations are for a crush of around 42.00 million tonnes, sugar production at 2.4 million tonnes, the ATR at 133.60 and the all-important split at 44.6/55.4. Unless there is any major unexpected increase in production it will concentrate traders minds on what the total production for the season might reach. It is more than likely the crush and production will still lag last season by the end of July which will have analysts making new projections. Much will depend on the tail of the harvest this year as production quickly fell away last harvest. At the moment reaching last season’s total of 32 million tonnes is achievable but not much more.

This morning the market opened 4 points firmer before slipping into the negative column. Currently, prices have recovered slightly and are 4 points higher. The VH is 2 point firmer at -16 while the HK is unchanged at +65. In early London trading the VZ and ZH are unchanged at +20.40 and +6.60. The macro is a mixed picture this morning with crude firmer after slipping yesterday. Grains/soya mostly slightly lower. The USD index is weaker while the BRL ended around unchanged last night at 5.36. The market is trying to find a bottom after the rapid drop seen over the past six sessions. However, further losses cannot be ruled out with the funds appearing to be still selling. Whether Unica will have any large impact on prices remains to be seen but a correction could quickly develop especially as there is likely to be limited resting selling 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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