Sugar Market Report for 28 September

Good morning,

The market dropped yesterday weighed down by the continuing negative macro and the weakening of the front month in NY. Lower than expected Unica data had little impact. The market had opened 8 points higher before quickly improving then settling into a narrow range for much of the morning. However, at mid-day prices started to improve culminating in hitting the day’s highs just after US traders got to their desks. But, unable to break above the previous day’s highs values started to drop. There was some initial support when the Unica report was released but it was only temporary with prices dropping 25 points in the latter part of the session before climbing slightly on the close as day traders covered. The VH was unable to make any further headway on the up-side and by the afternoon it came under pressure dropping back and wiping out the gains of the previous session eventually settling 13 points lower at +60. The OI dropped to 50,229 lots with another 20,806 lots traded yesterday. There does look as if the strong spot premium is attracting sugar to the tape and the longs are trimming positions. The HK ended unchanged at +66. In London  the structure also weakened with the ZH down $1.6 at +35.20 and the HK down $1 at +9.70. The WP also dipped with the ZH ending at 140.50 and the HH WP at 105.30. The strength of the spot month seems to have finally started to wane although it would seem unlikely to drop substantially. The rest of the board sagged back to the lower end of the recent range inline with the expected up-coming global surplus for 2022/23.

Unica released their harvest data for the first half of September yesterday afternoon for the CS. It showed a total of 39.49 million tonnes of cane was crushed during the reporting period producing 2.86 million tonnes of sugar with a 48/52 sugar/ethanol split. Although the figures were slightly below expectations they were all over the same time last season. The crush was hampered by rain across the region which disrupted field operations but, of course, will have been beneficial for the remainder of the standing cane. Cumulatively, things are still running behind last year with the crush just over 6% lower and sugar production 8.4% lower. However, this time last year the cane was under increasing pressure due to drought conditions so the expectations are that this harvest will continue to catch up and probably better last year’s total production of 32 million tonnes assuming reasonable weather and a long harvest tail. Much will depend on the amount of cane left to crush with current estimates still wide from 530 – 560 million tonnes.

This morning the market opened 1 point higher but then immediately dropped 12 points before finding some support just below 17.50. The VH has improved and is 8 points firmer at +68 while the HK is unchanged at +66. In London the ZH is a little lower at +34.40 while the HK is a tad firmer at +10.40. The macro has turned negative again after yesterday’s slight revival. Most commodities are trending lower with the USD Index seeing a new 20 year high. The BRL is weaker at 5.38. The market continues to look relatively well supported at the moment with the spot month maintaining a healthy premium. However, the rest of the board is now below the range seen during mid-August to mid-September and once the V-22 expiries support may become thinner. The market awaits news from India regarding their export policy and how the CS harvest progresses.

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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