Sugar Market Report for 7 July

Good morning,

Yesterday saw an inside day in NY as the previous 4 month low held aided by a slightly better macro picture and a continuing strong London market. The market had opened 10 points higher before improving another 7 points on early short covering. However, there was little follow-through buying with prices soon dropping back into the negative column. However, enough support was seen just above the lows of the previous session to stop any further deterioration in prices as the fund selling lessened. Prices soon improved back to the opening level but it was only late in the session that more short covering was seen to push prices up to the highs of the day where they settled. The VH improved a couple of points to -25 while the HK was 9 points firmer at +60. In London the recent strength was maintained especially in the spot month which expires on the 15th July. The QV improved to +23.70 while the VZ also improved to +22.70. As of the COB 5th July the OI in Q-22 was at 18,913 with another 7,349 lots traded yesterday so it does look as if it will be a small delivery currently. The WP slipped back yesterday with the VV WP valued at 129.50 and the VZ WP at 106.90. After 2 sessions which saw prices dive 80 points it was probably no great surprise prices improved a little yesterday especially although the macro was no better.

The major consequence of the deterioration of the macro recently from a sugar fundamental basis is that ethanol parity has dropped and is probably now below current sugar prices. Unica will publish their second half June harvest data probably early next week. It is unlikely any significant change in the sugar/ethanol split will be seen as it will take time to filter through. Nevertheless, the possibility of the CS reaching and perhaps even breaching the 32 million tonnes produced last year now looks more likely but much will depend on the amount of cane for crushing, the ATR and the weather. It will only be much later in the season when things will become clearer.

This morning the market opened 5 points firmer before improving another 8 points. However, currently, prices have fallen back and are now 4 points firmer. The VH is 1 point stronger at -24 while the HK is unchanged at +60. In early London trading the QV is firmer at +26.70 while the VZ is slightly weaker at +21.80. This morning the macro is a more positive picture after the large sell-off seen since late last week. All commodities are higher with biggest gains in grains/soya which had been hit the hardest. The USD index is lower but still close to its highest level since 2002. The BRL ended at 5.42 yesterday its weakest level against the USD since February. A further correction is likely to be seen today the extent likely to be determined by what happens elsewhere. However, it is likely prices will consolidate above 18 cents. In London the spot month strength is likely to be maintained also adding support in NY. The QV hit its highest level of +32.50 yesterday as short continued to cover before dropping back by the close. The strength in whites is seen well into the first half of next year although the high WP should allow all but the most inefficient refiners to produce white sugar at a decent profit.

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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