Sugar Market Report for 8 February

The market improved yesterday after the sharp falls of the previous two sessions aided by afternoon fund buying across most commodities. The opening was particularly volatile with prices opening 12 points higher only to immediately drop 14 points with support noted at the lows of Monday. The market then saw a modest recovery before dropping again as US traders got to their desks with new lows of the move posted as 20.50 was reached. However, good support noted below this level which triggered some short covering which was soon joined by fresh fund buying that was noted across the commodity complex which took prices up over 50 points and above 21 cents. However, prices eventually retreated to settle 18 points higher on the day although prices improved post-settlement by 5 points. The HK ended unchanged at +116 while the KN gained 2 points to finish at +63. In London the spot month improved back to a premium against the rest of the board as the fund long rolling finished. The HK gained over $4 to end at +2.80. The OI dropped to 15,839 with another 7,284 lots traded yesterday. The KQ also ended slightly firmer at +14.80. This meant the HH WP gained $5 to end at 99.00 while the KK WP was a tad lower at 121.70. The macro played a big part in yesterday’s recovery. It would seem the funds are optimistic regarding the US economy with interest rates, perhaps, peaking soon. Biden’s State of the Union speech last night was seen as more of an election speech and was seen as fairly neutral. The market is trying to find a bottom and, currently, 20.50 is seen as to where the commercial buyers are looking to buy.

This morning the market opened unchanged in quiet trading. Currently, the market is 2 points lower. The HK and KN are both 1 point lower at +115 and +62 respectively. In early London trading the HK is a tad lower at +2.60 while the KQ is also slightly lower at +14.20. The macro is a positive picture this morning with USD Index lower and most commodities higher. The BRL ended weaker yesterday at 5.21. Having bounced off the lows yesterday traders now seem unsure of direction. Much will depend on the macro and the fate of the Indian harvest. The funds are likely to still be heavily long judging by the limited reduction of the OI although things are rather opaque due to the lack of COT. Hopefully, a report will be released within the next couple of days. The market may become range-bound between 21 and 20.50 cents with many unsure of which may be broken first.