Sugar Market Report for 4 August

Good morning,

The market rallied to its highest level in two weeks yesterday but fell back as crude dropped to finish in the middle of the day’s range. The market had opened 8 points weaker before falling another 20 points over the next hour to post the lows of the day. However, good support was found at 17.50 and prices soon reversed the losses and was back in the plus column by mid-day. Prices continued to improve during the early afternoon as more short covering emerged. Prices did manage to creep above 18 cents but more selling appeared which triggered some day trader liquidation which soon had prices dropping back to settle with most gains on the day and for the third successive day. Nevertheless, it was a quiet session. The VH dropped 1 point to end at -12 but did hit -6 during the session its highest level since early March. The HK was unchanged at +62. In London it was quiet with the VZ ending firmer at +24.20 and the ZH at +11.60. This meant the WP improved with VV WP at 136.00 and the VZ at 111.70. Further consolidation was seen yesterday as the market recovers from hitting a one year low on Monday. The funds are net short and have been trimming their position but to no great degree.

The Indian monsoon has been good during June and July after a sporadic start. June saw rainfall 8% below the long-term average but July was 17% above the long-term average. Indeed July was the wettest since 2005. Over 300mm of rainfall was recorded only the fourth time since 1995. Normal rainfall is forecast for August and September.

Tereos announced this morning that they expect above-average sugar beet yields for France despite recent low-rainfall and high temperatures. Average yields for the season are expected to be above the average of the past five years. In Russia the fourth sugar beet test since the beginning of the year shows the average root weight had risen to 328 grams from 303 grams this time last year the Russian Sugar Producers’ Union reported yesterday. However, the sugar content stood at 12.86% down from 15.38 % last year.

The Indian cabinet has approved raising the price of sugarcane paid by mills. For next season mills will pay 305 rupees for 100kg up from 290 rupees for the current season. The government generally raises cane price every year so this increase comes as no surprise. UP are likely to raise the price further.

This morning the market opened 14 points lower mainly on a lower crude quote with WTI hovering just above the $90 level and near its lowest level since before the Russian invasion of Ukraine. Currently, prices are at 10 points weaker. The VH and HK are both 1 point firmer at -11 and +63 respectively. In early London trading the VZ is firmer at +25.60 and the ZH at +11.80. As mentioned crude is slightly lower this morning while other commodity markets are mixed. The USD Index is weaker after two days of gains. The BRL ended slightly weaker again yesterday at 5.28. The market looks set to continue to consolidate between 17.50 and 18.00 cents with an upward bias assuming crude does not tumble further. The funds are short and may cover more while it would seem unlikely they will increase their shorts unless prices drop back to the lows seen on Monday.

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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