Sugar Market Report for 3 May

Good morning,

The NY market dropped yesterday to make a new low since March in thin trading with London closed for Bank holiday. The delayed start saw the market gap lower on the opening on a negative macro picture with crude down and USD index up. The gap failed to fill as prices soon dropped further losing another 13 points in the first five minutes of trading. Over the next 30 minutes the market fell another 20 points before some support was found near the triple bottom between 18.73 and 18.77. Eventually, the support broke with prices dipping another 5 points to hit its lowest level since 18th March. By the close prices had pulled off the lows but still settled weak. The NV weakened to end at -14 while the VH finished at -30. The session was dominated by the macro with the USD index hitting its highest level since March 2020 and the BRL weakening to 5.085 its weakest against the USD since March.

The K-22 expired on Friday quietly with a small 3,573 lots (181,500 tonnes) delivered. The sole receiver was Louis Dreyfus with Sucden the main deliverer with Raizen, Alvean and Man making up the rest. The majority of the sugar delivered from Brazil with the rest Centrals. Most saw the small delivery as neutral with little interest to take or make delivery as the next Brazilian CS harvest cranks into gear.

The COT as of the 26th April saw the funds/specs cut their net long position by 35,871 to 139,137 during a period when the market fell 84 points. Therefore, the cut in the speculative long was expected. The non-commercials cut their net longs by 18,332 to 100,783 as fund managers cut positions only established a couple of weeks earlier. They have probably cut more longs since the report and are currently back to around 80k lots net long a similar position held as of the 5th April. The commercials cut their net shorts by 38,805 to 393,286 as the trade took profits on shorts as prices dropped while some long liquidation was also noted with the K-22 expiry. The Index funds cut their net longs by 2,934 to 254,148.

This morning the market opened unchanged before improving slightly. Currently prices are 4 points firmer. Both the NV and VH are 1 point better at -13 and -29. In early London trading the QV and VZ are both virtually unchanged at +9.30 and +3.30. The macro is mixed this morning after the negativity of yesterday with crude around unchanged while grains/soya mostly lower. The USD index is weaker after hitting new high yesterday while the BRL ended weaker again. The market looks tired and could slip lower and test the 18.50 level especially having given back all and more of the gains seen on Friday. However, the Brazilian CS harvest is off to a very slow start and it is still a very uncertain picture as to how much cane will be used for sugar production and, therefore, total production. It will be several weeks before a clearer picture emerges which may stop any serious decline in prices. The US Fed will meet this week to discuss and raise interest rates. With the Russia/Ukraine war into its second month and concerns over Chinese economic growth due to their continuing Covid lock-downs many fund managers are reducing risk so any rally would seem unlikely.

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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