Sugar Market Report for 27 October

Good morning,

The market continued to weaken yesterday despite the structure remaining firm falling to its lowest close since 4th October. The market had opened 1 point lower before falling to the lows of the previous session where some light support was found. However, more selling appeared mid-morning taking prices down to just shy of 18 cents. As US traders got to their desks this support at 18 cents broke and prices continued to fall for the remainder of the session culminating with prices closing at the lows. The trading volume still remains underwhelming. Interestingly, the structure remained firm despite the flat price weakness suggesting much of the selling was fund related long liquidation. The HK ended 1 point firmer at +94 higher than when the H-23 flat prices hit the recent highs on the 12th October when it settled at +88. The KN ended 1 point weaker at +49. In London, it was a similar story with the flat prices dropping but the ZH ending only marginally weaker at +31.20. There was a larger drop on the HK to +7.40 its lowest level since early August. This meant the ZH WP improved marginally to 125.50 as did the HH WP which finished at 94.40. Yesterday’s continuing weakness was due mainly to continuing fund liquidation as the market broke down below 18 cents and only light scale-down end-user pricing although it should be said that this increased below 18.00 cents but much of it further down the board. It should also be noted that the flat price weakness was despite the USD weakening considerably as the Fed, seemingly, is taking a less hawkish view on US interest rates.

Limited fresh fundamental news around after the release of the Unica harvest data on Tuesday. The market still awaits the Indian government’s pronouncement regarding their export policy. On the 17th October, the markets were told an announcement would be made within a week. It would seem a foregone conclusion that a minimum of 5 million tonnes will be allowed in the first tranche but no one will be taking anything for granted.

This morning the market opened 2 points higher but soon dropped back. Currently, prices are 4 points lower and at a new low for the move. The HK and KN are both unchanged at +94 and +49 respectively. In early London trading, the ZH is firmer at +31.90 as is the HK at +7.70. This morning the macro is a mixed picture with crude slightly lower, grains/soya around unchanged and the USD Index a little higher after the big drops seen over the past week. Yesterday it dropped to its lowest level since the 20th September as traders expect a less hawkish Fed ahead of next week’s FOMC meeting. The market has dropped over 110 points over the past 11 sessions and is back to the levels seen before the last bout of fund buying when they built a net long position of around 40k lots. They may have more to liquidate but unlikely to take the market much lower and some correction might be seen over the next couple of sessions. The continuing strength of the front spread belies the weak flat price. However, it would seem unlikely any significant rally will build in the short term. Any announcement from the Indian Government may also be met with a limited response.

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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