Sugar Market Report for 9 May

Good morning,

Friday saw prices make a significant correction after the support at around 18.50 held for the fourth session. The market had opened 6 points firmer but quickly dropped lower to hit the lows of the day within the first 40 minutes of the session. With good support note again below 18.60 prices started to improve with fund short covering noted. The market faltered around mid-day falling back into the negative column. But the selling soon dried up with prices, this time, swiftly gaining ground with limited selling in place. The market improved over 50 points to hit the day’s highs and their highest level in a week. The market then remained within a narrow range through to the close to settle at their highest level since 28th April. The NV gained 3 points to end at -10 while the VH improved by 6 points to end at -25. In London it was, again, quiet with the QV finishing a tad firmer at +9.40 while the VZ gained over $2 to finish at +4.90. This meant the VV WP gained $3.50 to 97.30 while the VZ was also slightly firmer at 92.40. The macro saw some strength on Friday with crude higher and the USD taking a breather after the large gains of the week. This appeared to trigger a bout of short covering which took prices higher with limited resting selling found until prices were well over 19.00 cents. There appeared to be little fundamental reasons for the push higher.

The COT as of the 3rd May showed that the funds/specs cut their net longs position by 28,564 to 110,573 during a period when the market dropped over 30 points. The non-commercials cut their net longs by 24,929 to 75,854 as the funds continued to liquidate the longs they bought when prices rallied to 20.50 in the middle of April. Given the correction seen on Friday they have probably covered much of the gross shorts (9,911) sold during the period. The commercials cut their net shorts by 35,820 to 363,055 as trade cut shorts although there was some long liquidation as well. The end-users still look under-priced with the good buying below 18.60. The Index funds cut their net long position by 1,666 to 252,483.

In has been a long time coming but the Thai harvest has finally ended with the last mill stopping operations for the season last week. A total of 92.07 million tonnes were crushed with a total of 10.2 million tonnes of sugar produced. Most analysts see another improvement next season with over 100 million tonnes of cane assuming the weather remains conducive.

This morning the market opened 16 points lower on the back of negative macro picture and immediately dropped another 9 points before recovering slightly. Currently, prices are 18 points lower. The NV is 1 points firmer at -9 while the VH is unchanged at -25. In early London trading the QV is slightly firmer at +9.90 while the VZ is a tad weaker at +4.30. As mentioned the macro is negative this morning with the USD index at its highest level (104.08) since February 2003 as a definitely risk off attitude envelops the markets. Many await Russia’s President Putin’s speech at their Victory day. The rally on Friday maybe fleeting but the support is likely to remain in place so the down-side would seem limited. Unica likely to release 2nd half April crush data in the next day or so which will give a flavour as to how much cane going to ethanol production and could bolster prices as the harvest continues to see a slow start.

 

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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