Sugar Market Report for 30 June

Good morning,

The market ended virtually unchanged yesterday after dipping back to the support at around 18.30. Oddly, the highs of the day in N-22 were hit during the post-settlement period with prices jumping 10 points suggesting late speculative short covering in front of today’s expiry. The market had opened unchanged but soon started to fall away with a slow decent to the lows of the day by early afternoon. With support found just above 18.30 prices reversed clawing back to earlier losses to end around unchanged by settlement before the late push higher in the spot month. The NV ended 1 point firmer at +4. The OI in N-22 dropped to 23,243 lots with another 21,568 lots traded yesterday suggesting that the delivery will be relatively small at around 500k tonnes. The VH ended 1 point lower at -27. The trading volume dropped yesterday as the market continues to trade within a range. In London the QV ended unchanged at +22.60 while the VZ was a tad weaker at +17.00. The WP was quiet with VV at 123.10 and the VZ at 106.10. The market is searching for direction at the moment. Short term the sentiment is negative but there is still longer concerns over Brazilian production, the Indian government’s policy on exports for next season and their monsoon which is patchy and slow so far.

The Indian government is said to be considering allowing mills to export sugar stocks that have built at ports and warehouses since the Government announced a cap of 10 million tonnes of exports for the current season. Millers have requested the ability to export raw sugar as stocks increase. ISMA believe it make sense to export an additional 500k tonnes of raw sugar as the 10 million tonne limit has already been reached.

Yesterday Sugaronline held a seminar in London with eminent analysts discussing a variety of topics. There was a general consensus that 2022/23 will see a small global surplus but with the large proviso that much can still happen in Brazil over the next 6 months which could have a marked impact on prices. Changing fuel taxes, ethanol demand and ATR make final production levels virtually impossible to predict but, currently, an unchanged production from last season at 32 million tonnes is pencilled in by most. India production looks likely to be only marginally lower than the 36 million tonnes produced this season. The monsoon is a slight concern at the moment but Indian metrologists are confident that it will be an average monsoon. Even a poor monsoon would probably have limited impact on the next cane crop as reservoirs are at decent levels at the moment. Thai production is seen increasing with a possibility of 120 million tonnes of cane as the weather has been excellent recently. There was more disagreement on consumption with some seeing a decent recovery while other still see a limited improvement. The usual lively debate ensued on sugar and health. The conundrum on rising obesity rates despite dropping sugar consumption does suggest that weight gain is unlikely to be just about the amount of sugar consumed.

This morning the market opened 3 lower in quiet trading. Currently, prices are holding around 2 points weaker. The NV and VH are both unchanged at +4 and -27 respectively. In early London trading the QV is virtually unchanged at +22.80 while the VZ is firmer at +18.00. The macro is mixed this morning with crude lower while grains are mixed. The USD Index is virtually unchanged. Today is month and quarter end and the release of the latest USDA report with some expecting a volatile day. Whether this is seen in sugar remains to be seen. Coffee jumped nearly 5% yesterday for no obviously fundamental reason. The N-22 expiry is expected to be quiet and orderly. The market looks likely to remain within the range seen over the past week with support below 18.10 and selling at above 18.60.

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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