Sugar Market Report for 9 May

Yesterday was a shortened session in NY as London remained closed for the King’s Coronation holiday. The market eased lower after the large gains of Friday. The market had opened 10 points firmer improving slightly over the next few minutes. However, the high of the day was soon in place as prices started to ease. The market dropped nearly 50 points over the next 40 minutes before support appeared at 26.00 cents which triggered some day trader short covering. The market improved back to near opening levels but then fell back in the last couple of hours of trading in thin trading volume with the market, eventually, settling near the lows but still well above the lows of last week. The NV ended 1 point lower at +36 while the VH was 4 points weaker at +40. The market was unable to build on the gains of Friday after the correction came to a sudden halt. Some suggested the COT report was the reason for the drop back as the funds were liquidating as opposed to adding their longs. However, they have appeared to be averse to increasing their net longs significantly for several weeks so not too much of a surprise. There seems to be some resistance building just below 26.50 (double top at 26.48) which may be a sign that at the exalted levels there is a reluctance to buy afresh unless the fundamental picture becomes more bullish.

The COT report as of the 2nd May showed the funds/specs had cut their net long position by 9,031 to 208,876. This was during a period that prices improved 86 point at one point before falling back to 25.07. The non-commercials cut their net longs by 7,507 to 155,058 which was seen, by some, as bearish as the funds seem keener to liquidate than add to their longs. However, it would seem unlikely they will liquidate wholesale for the time being and do have ammunition to buy if they desire. The commercials saw their net short position drop by 27,424 to net short 351,117 as the trade covered shorts and there was some light end-user pricing. The biggest change was seen in the Index funds positions who cut their net longs by 18,393 to 142,241 their smallest net long position for 3 years.

This morning the market opened 3 points weaker on some light early speculative market on opening selling. However, prices soon recovered and are, currently, 3 points higher. The NV is unchanged at +36 while the VH is 1 point firmer at +41. In early London trading the QV is up a tad at +10.70 while the VZ is slightly weaker at +10.90. The macro is a negative picture this morning with most commodities lower while the USD Index is slightly higher. This would appear to be mainly on China’s imports shrinking which the world was relying on to increase imports once Covid restrictions were fully lifted earlier in the year. The market looks set to remain firm. While the fundamental picture remains positive it has not changed too much recently. The market has absorbed the lower Indian and Thai production and the slow start to the Brazilian CS harvest. However, the Indian monsoon is due to start in around three weeks. While a normal monsoon is forecast is predicted much can happen and nothing is certain. Other weather issues may appear. The logistical problems of shipping large amounts of raw sugar from Brazil is another concern although regardless of potential delays the sugar will still exist and end users will, probably, have taken these delays into account. Resistance is seen just shy of 26.50 while support seen at 25 cents.