Sugar Market Report for 9 August

Good morning,

The market improved to its highest level in two weeks before slipping back to near unchanged by settlement. The London market also lost ground after the large gains on Friday. The market had opened 2-3 points firmer before, quickly, climbing further with buy stops triggered as the 18 cent level was breached. The highs of the day were soon in place as prices started to decline as the initial buying dried up. By mid-morning prices had slipped into the negative column but soon improved back to unchanged. The market then settled into a modest 12 point range for the rest of the session although another bout of speculative short covering was seen on the close which had prices above 18 cents again. The VH ended 1 point weaker at -9 while the HK lost 3 points to finish at +58. In London is less volatile than of late. The VZ ended over $3 weaker at +30.60 as was the ZH which finished at +15.50 on profit taking. Subsequently, the WP also dropped back with the VV WP $6 lower at 149.10 and the VZ WP at 118.60. The market continues to pull off the one year lows reached at the beginning of August. However, as yet there is little evident of any wholesale covering by the funds who have built a sizable short position recently.

The weather across several large producer regions is mixed at the moment. On the plus side the Indian monsoon has been good recently with excellent rains received during July. In Brazil’s CS ample rains are falling and should continue for a few days yet. Sao Paulo state along with Mato Grosso do Sol and Goias will receive as much as 60 mm of rain over the coming days which will help to improve soil moisture levels after a period of dryness. While the rain will hamper the on-going sugar crush across the CS and, probably, lower ATR it bodes well for the cane to be cut later in the season although more rain is forecast for the second half of August. However, it is a different picture across the EU and UK. Czarnikow issued a research note saying they see total EU and UK sugar production at 16.4 million tonnes around 1 million tonnes less than last season due to hot dry weather across much of the main growing regions. Further reduction in expected production might be seen if there are not any meaningful rains over the next few weeks. This prospect is likely to underpin the white sugar market.

This morning the market opened 3 points lower before slipping further. However, prices have now recovered back to unchanged. The VH is 2 points better at -7 while the HK is unchanged at +58. In early London trading the VZ is $3 firmer at +33.90 while the ZH is unchanged at +15.50. This morning the macro is mixed with crude lower, grains/soya higher and the USD Index is a tad weaker. The BRL ended firmer last night at 5.112 it strongest level against the USD since the middle of June. It was a quiet session yesterday and today promises to be little different. The market is trying to find a level after slowly recovering from the one year lows hit just over a week ago. Nevertheless, the funds have a relatively large short position which they are more likely to cover than increase at the moment. Unica is likely to release their second half July harvest data later this week which will continue to give an indication on whether production is catching up with last year’s harvest. As at the middle of July sugar production was still over 17% lower year on year and that is against a poor 2021/22 season.

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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