Sugar Market Report for 5 May

Good morning,

Yesterday the market made another new low since dropping from 20.50 reached in the middle of April although it managed to scramble back to unchanged by the close. The market had opened 8 points firmer on higher crude prices. The market did, momentarily, dip back to unchanged but soon started to improve on short covering as crude improved further on talk that the EU would look to ban all Russian oil imports. The highs of the day were hit as US traders got to their desks but the buying petered out at the highs of the previous session with a double top being formed at 18.91/92. Prices soon started to tumble back eventually pushing through unchanged to hit the lows of the day and their lowest level since 18th March. However, by the close prices were back to unchanged. The NV and VH ended unchanged at -16 and -32 respectively. London saw prices drop but were unable to recover so settled at their lowest level since March. The QV finished a little higher at +9.10 while the VZ dropped to a 7 week low ending at 1.80. This meant the WP weakened with the VV WP finishing at 93.80 and the VZ at 92.00. The market had looked relatively firm in early trading as it followed crude higher. However, further fund liquidation was noted during the afternoon which took prices down to below 18.60 where good scale down buying was noted suggesting end-user pricing.

According to ISMA Indian mills have signed contracts to export around 8.3 million tonnes of sugar so far this season which will come as no great surprise given prices pushed well above 20 cents in April. The association also reported that a total of 34.2 million tonnes have been produced so far this season. Given crush is expected to extend into June it would seem likely that the expected 35 million tonnes will now be exceeded. This huge and unexpected production has now added around 5 million tonnes to analysts earlier global P&D. One should also remember that a sizable amount of the exports were from stocks from the previous season.

The Brazilian unit of Tereos reported yesterday that they expect to crush 17 million tonnes of cane in the just started 2022/23 season. More interestingly, they reported they expect to allocate 65% of cane to sugar production up from 62% last season while the rest would go to ethanol production. Although one should not extrapolate too much from one company it does suggest that a large general shift from sugar to ethanol maybe unlikely.

This morning the market opened 12 points firmer on the back of a positive macro after the Fed increased US interest rates by 0.50%. Currently, prices are around 9-10 points firmer. The NV and VH are both unchanged at -16 and -32 respectively. In early London trading the QV is weaker at +8.70 while the VZ is also a tad lower at +1.60. As mentioned above the US Federal Reserve increased US interest rates by 50 basis points yesterday the largest single increase since 2000 and signalled it intends to increase rates by the same amount at the next two meetings. This is in response to raging inflation with the core rate hitting 5.2% in March. The markets have reacted positively after a 0.75% rise was ruled out. This morning most markets are firmer but the gains are limited. The USD Index is improving after dropping away from multi-year highs yesterday. The BRL has improved against the USD ending at 4.92 last night. Given the good support noted below 18.60 over the past couple of days and the more positive macro the lows may be in place for the time being and the market will try to consolidate. Nevertheless, there would seem little reason for a significant rally to develop and 19 cents maybe the extent of any improvement.

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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