Written Commentary
The Ghost in the Machine Q4 2023
November 28, 2023
Good morning,
The market saw an attempt to consolidate yesterday after dropping to one year lows the previous session ending slightly higher on the day for the second consecutive session. The market had opened 7 points firmer on the seemingly daily market on opening buying and as has been the case for several opening soon dropped away once this buying dried up. Over the first 40 minutes the market fell 25 points before finding some limited support. However, more speculative selling saw prices drop to the lows of the day but well above the one year lows reach on Monday. By mid-afternoon the market started to improve on short covering which saw prices push to the highs of the day on the close. The trading volume was limited with prices well within the range of the past six sessions. The VH improved 1 point to -11 while the HK was also 1 point weaker at +62. In London the spot moth continues to weaken against the rest of the board on profit taking but still remains at a healthy premium at +23.80 while the ZH finished virtually unchanged at +9.90. This meant the VV WP slipped to 132.10 while the VZ improved slightly to 108.30. The market is trying to consolidate and get some traction to improve further. With still uncertainty over the production from Brazil’s CS many will feel the market has fallen enough and it was only the decision of the funds to sell afresh that has caused prices to collapse. There is little producer selling around current levels so if the funds decide to cover even a small amount of their shorts the market could improve. The Vietnamese government has imposed an anti-dumping tax of 47.64% on sugar products imported from countries in the area but originating from Thailand. Last year a similar tax was imposed on sugar directly from Thailand but avoidance was seen by buying sugars from the likes of Laos, Cambodia and Malaysia who were selling imported Thai sugar. The measure is seen to help protect the domestic market but it is still seen as workable for refiners and distributers who will just have to adjust prices and swallow a smaller profit margin. This morning the market opened 8 points weaker where prices, currently, remain. The VH is unchanged at -11 while the HK is 2 points better at +64. In early London trading the VZ is a tad lower at +23.30 while the ZH is valued slightly better at +10.20. This morning the macro is a mixed picture with crude slightly lower, grains/soya slightly firmer and the USD Index unchanged. The BRL weakened yesterday to end at 5.27. The market continues to try to consolidate around current levels. If the market fails to break new lows it might not be long before the funds decide to lessen their shorts. Perhaps an improvement in the macro could be the trigger. Nevertheless, the funds do have the ammunition to sell more but probably not until the lows are revisited. |
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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.
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