Sugar Market Report for 31 August

Good morning,

The market dropped yesterday mainly on the back of renewed macro pessimism which saw most commodities drop. The market had opened unchanged before swiftly testing the previous day’s high. Unable to break decisively higher prices soon started to ease lower thereby leaving a double top at 18.51/52. Chatter that some Indian mills have sold raw sugar for last quarter this year put pressure on the market but it was the general sell-off across the commodity spectrum and especially crude which had prices dropping heavily during the latter part of the session to settle 4 points off the lows and back into the range seen for much of the past nine sessions. The VH still maintained its premium but ended 2 points lower at +14 while the HK saw a 5 point drop to +55 and to its lowest level since 6th July. In London the structure weakened slightly which saw the VZ finish at +27.50 and the ZH at +18.10. This meant the WP slipped slightly but still remains at strong levels with the VV WP at 149.50 and the VZ WP at 122.00. Crude dropped $6 yesterday on renewed chatter that a US/Iran deal to revive a nuclear agreement could allow Iranian oil exports again. Also concerns that unrest in Iraq was having little impact on oil production. Additionally, the markets continue to be gripped by interest rate fears due to global inflation. Sugar has been caught up in all this negative sentiment and fell back as the funds became sellers again although the trading volume remained light. There was limited scale down buying resting below the market which probably exacerbated the situation.

According to trade sources Indian traders have agreed export deals of around 300k tonnes for Nov/Dec shipments despite no official export policy being announced by the Government as yet. It would appear traders are happy to take the risk suggesting they are confident that an export policy will be announced before long. The general view is an initial 5 million tonnes of exports will be agreed with possibly another 3 million tonnes later in the season once the harvest and prices are assessed. While only small shipments agreed it does emphasis the mills intention to export. The shipments are thought to be for raw sugar and traded at a 1 cent premium to the market. Shipment likely to be to Indonesia, Bangladesh and, possibly, Dubai.

It is now estimated that Russian sugar production will reach between 6.35 and 6.55 million tonnes this season. With consumption at about 5.9 million tonnes. This means Russia will have ample volumes of white sugar to export to EAEU countries with Kazakhstan the biggest buyer of Russian sugar.

This morning the market opened 11 points higher on an improved macro picture. However, after improving another 4 points, prices slipped back and are, currently, 6 points firmer. The VH and HK are unchanged at +14 and +55 respectively. In early London trading the VZ is slightly weaker at +27.40 while the ZH is valued unchanged at +18.10. The macro, as mentioned, is a slightly more positive picture this morning but, it would appear, the gloomy global outlook continues to cast a shadow over the markets. The USD Index is unchanged today while the BRL settled a little weaker against the USD last night at 5.10. Sugar looks likely to fall back into the recent range with further consolidation likely while intra-day direction dictated by the macro.

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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