Sugar Market Report for 28 November

Good morning,

Friday saw the market continue to fall after hitting multi-month highs the previous week ending some 115 points below those highs. The market had opened 23 points firmer after being closed the previous session for the Thanksgiving holiday and hit the highs of the day in early trading as the market soon started to fall dropping back to unchanged by late morning. Prices did marginally improve for a while as US traders got to their desks but it was short-lived with the market losing ground for the remainder of the session eventually closing at its lowest level since the 8th November. The HK weakened again ending 10 points weaker at +97 while the KN ended 8 points weaker at +59. In London, the HK weakened slightly to finish at +8.10. The KQ saw a volatile session eventually dropping $1.60 to +14.20. Friday saw the market react to the Unica data which had been released on Thursday when the market was closed. Initially, it looked as if some had seen the crush data as bullish although it would seem hard to justify this view as it showed the cumulative production of sugar has now surpassed last season at 31.966 million tonnes. It is now a question of how much more sugar can be produced before the end of the year – it would seem quite possible another 2 million tonnes could be added to the total and this eventuality may be one reason for the continuing drop in the market. The weakness of the macro is also weighing on the market.

Czarnikow cut their global sugar surplus for the current 2022/23 season from their previous estimate of 3.6 million tonnes to 2 million tonnes. This is due to revising down production in some smaller producers such as Russia, Vietnam, Egypt and Japan while global consumption remains firm at a record 176 million tonnes. With many of the largest producers yet to even start their harvests, all estimates are likely to change least of all consumption with concerns that China will see another drop in imports due to Covid restrictions and a global recession also hitting demand.

This morning the market gapped lower opening 8 points weaker – mainly on a negative macro picture as crude continues to drop. However, the chart gap was promptly filled with prices, currently, 3-4 points weaker. The HK is unchanged at +97 while the KN is 2 points weaker at +57. In early London trading both the HK and KQ are weaker with HK at +7.50 and the KQ at +13.60. As mentioned above the macro is a negative picture this morning as WTI crude drops to its lowest level in over 11 months. Grains/Soya are lower while the USD Index is slightly firmer. The BRL remains weak ending the week at 5.40. The market has seen a sizable correction from its rally above 20 cents which, was seen by many, as too high too quickly. However, as prices now approach 120 points off the highs some support might start to build. The COT, which is delayed by one day due to the US holiday, will be released tonight and will probably give a fair indication as to the extent the funds have built a long position. It would also seem their average prices for their new longs is not too far from current levels. However, with the macro looking weak it may trigger some fund liquidation which could take prices down towards 19 cents.

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.

© 2024 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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now