Sugar Market Report for 7 June

Good morning,

Yesterday saw price jump higher in NY but it was London which stole the show with prices surging higher on concerns over availability of white sugar with India capping of exports and refineries working at less than full capacity. The NY market had opened 16 points firmer leaving a small chart gap between 19.42 and 19.45. The market quickly gained another 30 points before finding selling at 19.75 which triggered some long liquidation which saw prices retreat slightly. Prices rallied further in the early afternoon to hit the highs of the day but, again, selling was found at above 19.75. Another bout of profit taking saw prices fall back to the opening levels before improving again before the close to settle higher but in bottom half of the day’s range. The structure was barely changed with NV unchanged at -18 and the VH 1 point weaker at -33. Having been closed for a couple of sessions London also surged higher on its opening hitting another 5 ½ year high and never fell back too far. The QV surged again to reach 28.6 by the close with the VZ also $7.50 firmer ending at +21.40. This meant the WP improved significantly again with the VV WP ending just over 130.00 while the VZ finished at 108.80. The strength in London seems to be because of concerns that the new Indian system to get permission to export is slow and onerous after the Government put a 10 million tonne cap on exports for the season. It is also thought that some refineries are working at less than full capacity. Adding to the bullish mix is the continuing export ban of sugar from Algeria and low EU exports.

The record sugar production seen in India this season looks likely to be repeated next season if the monsoon is average as the planted sugarcane area is up just under 2% so far this year compared with the same period last year. Some believe this may mean sugar output could reach another record in 2022/23 although there is a long time to go as the current season is still not completely over in a couple of states. Nevertheless, sugarcane remains very lucrative so farmers are keen to plant as much as possible. Secondly, many farmers have received their cane dues from the mills this season much earlier than in previous seasons.

This morning the market opened 16 points lower before quickly tumbling another 13 points before finding support just below 19.30. The NV is unchanged at -18 while the VH is 1 point weaker at -34. In early London trading the QV is slightly weaker at +27.80 while the VZ is firmer at +23.00. It is not entirely clear on today’s early weakness but perhaps the view that Brazil is likely to push ahead with keeping fuel prices under control. From a chart perspective if the chart gap formed on the opening is not filled today it will be seen as bearish. There is still a small 2 point chart gap below to be filled between 19.20 and 19.22 which is the downside target. However, a breach of this support could trigger some further fund long liquidation. The macro is mixed this morning with crude slightly higher while the rest of commodities are, generally, weaker. The USD Index is slightly higher while the BRL closed at 4.79 last night.

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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