Sugar Market Report for 31 July

Good morning,

The market dropped again on Friday as the correction off the recent highs continues with settlement lowest since 18th July. The market had opened 1 point weaker and continued to weaken until some light support was found at 24.10 which saw prices improve momentarily. However, it was not long before prices were falling again this time soon breaching the 24 cent level. The lows of the day were reached mid-afternoon before a sharp 30 point spike was seen on short covering. However, prices soon fell back to settle near the lows of the day. However, it should be noted the trading volume was particularly thin at just over 81k lots with many side-lined. The VH dropped 1 point to -22 while the HK lost 4 points to end at +133. In London it was equally as quiet but the structure continues to hold with the VZ improving slightly to finish at +9.00 although the ZH finished slightly weaker at +10.40. The VV WP was firmer ending at 151.20 as was the VZ WP at 142.20. The rally which saw prices gain over 340 points since hitting the lows at the end of June was seen by some as overdone given the weather across several major producers has not caused any major concerns at the moment. The funds have reinstated longs (see COT report below) which has fuelled the rally but appear to be now cutting their longs. It remains dry across Brazil’s CS enabling the crush to run at full pelt. The sugar/ethanol split is 50/50 probably as much as possible. The Indian monsoon is progressing well with areas which saw limited rains in June receiving better rains in July. Northern Europe is receiving wetter than average weather which will aid the beet’s development.

The COT report as of the 25th July shows the funds/specs increased their net longs by 25,155 to 144,299 during the period that prices improved 144 points. The non-commercials increased their net longs by 23,741 to 113,055 as fund managers reinstated longs liquidated during the second half of June. However, the recent drop in prices suggests they will have liquidated some of the newer longs and are probably back to around 90k lots net long. The commercials saw the trade sell into the rally while some end-users also priced. Therefore, the commercials increased their net shorts by 30,753 to 322,100. The index funds increased their net longs by 5,597 to 177,801.

Egypt’s state grains buyers has confirmed they have bought 150k tonnes of Brazilian raw sugar in their latest tender. The sugar which is contracted to arrive September/October will be delivered by Viterra (100k tonnes) and Alvean (50k tonnes).

This morning the market opened 3 points higher before improving further. Currently, the market is 12 points firmer. The VH is 1 points firmer at -21 while the HK is 2 points weaker at +131. In early London trading, the VZ is weaker at +8.50 and the ZH is unchanged at +10.40. The macro is a slightly negative picture this morning with crude slightly lower along with grains/soya. The USD index is slightly higher as it continues to improve from the three month lows hit last week. The BRL ended the week slightly better at 4.73. Traders seem unsure of direction at the moment so hence the low trading volumes. The market could start to consolidate around 24 cents but with a downside bias.

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.

 © 2023 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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now