Sugar Market Report for 30 January

Good morning,

The market extended its gain from the previous session on Friday breaching the 21 cents level settling at its highest level in just over a month. The market had opened 8 points firmer before dipping back to unchanged but soon started to improve. Initially, enough resistance was found to stop the improvement just below 21 cents, eventually, triggering some spec long liquidation which took prices down into the negative column and the lows of the day. However, another wave of buying appeared taking prices past the previous highs and breaking above 21 cents on the close and reaching the highs of the post-settlement period. The HK actually ended 1 point lower at +135 while the KN was 3 points firmer at +82. In London prices improved after a couple of sessions struggling to keep up with NY. However, the HK did end weaker again at +8.90 while the KQ was, virtually, unchanged at +16.80. The WP improved with the HH WP ending just above 100.00 while the KK WP was nearly $1 firmer at 121.20. The funds/specs continued to take advantage of the lack of sellers in the front month and nervousness for any fresh selling. Chatter about lower Indian production continues to overshadow the market despite excellent cane prospects across Brazil’s CS.

The COT, as of the 24th January, showed that the funds/specs had cut their net long position by 6,160 to 159,126. This was during a period that prices declined just over 60 points so some liquidation was to be expected. The non-commercials cut their net longs by 4,237 to 115,106 suggesting the funds were fairly inactive during the period that was reflected in the trading volumes over the 5 sessions. The commercials cut their net shorts by 8,236 to 332,742 but both gross longs and shorts increased their positions suggesting pricing on either side as the spot month expiry coming into focus. The Index funds cut their net longs by 2,076 to 173,617.

It has been reported that sugar mills in India’s top cane producing state, Maharashtra, are set to stop cane crushing 45-60 days earlier than last season due to adverse weather which has cut cane availability. It is estimated that sugar production could drop by 1 million tonnes from the 13.8 million tonnes produced last season to 12.8 million tonnes this season. The state’s sugar commissioner, Shekhar Gaikwad, said that excessive rainfall has curtailed the sugar cane’s vegetative growth and therefore, less cane to crush. Whether the drop of 1 million tonnes is justified remains to be seen but higher production in other states and an increased planted area may limit and large overall drop.

The French Sugar Producer, Cristal Union, said on Friday that they will raise the target price it will pay for sugar beet this year after the news that neonicotinoid pesticides will be banned from use this year in France. This is hoped to encourage farmers to maintain and, possibly, increase their planted area for beet. The company’s main competitor, Tereos, has yet to make any announcement.

This morning the market opened 5 points stronger at 21.01. Currently, it is 1 point lower. The HK is 1 point firmer at +136 while the KN is unchanged at +82. In early London trading, the HK is lower at +8.40 while the KQ is around unchanged at +18.80. The macro is a mixed picture this morning with crude lower while grains/soya firmer. The USD Index is a tad lower while the BRL ended slightly weaker on Friday at 5.10. The market continues to remain firm. Nevertheless, while selling remains thin prices could continue to improve although whether the strength can be maintained would seem questionable. The multi-year high reached just before Christmas at 21.18 is the next upside target. A bout of long liquidation could see prices drop rapidly back to 20 cents but probably not ready to do so just yet.

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.

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