Weekly Sugar Wrap
Written by Howard Jenkins, Head of Global Commodities, ADM Investor Services International Limited
The week started with a bang as prices hit their highest level since the end of February only to collapse over 75 points later in the day on a long predicted correction. Since then the market has shown its resilience with prices recovering despite a rocky macro picture. However, the trading volumes have been very disappointing. Wednesday saw the lowest total trading volume for several years. The funds have continued to increase their net long position to possibly around 200k lots. Their positive attitude is not just in sugar. They are currently long of virtually all agricultural contracts suggesting the see better possible returns than in other assets classes which are more influenced by the pandemic.
Rain has finally appeared across Brazil’s CS regions just as analysts were beginning to use ‘drought’ in their reports. Showers and longer periods of rain are forecast for the next ten days. Traders will be watching the forecasts closely. At this time of year the weather can quickly turn hot and dry again. This is often more of a problem for coffee as the trees begin to flower. However, the largest unknown at the moment it what the Indian Government will do regarding their export policy for this season. The ‘subsidy’ prices will determine at what prices their sugars become competitive. Understandably, this will have a huge bearing on the market and is one reason the market might remain range-bound in the short term. An official announcement is not expected until early November – it has been pointed out that the Indian government probably has more pressing issues with the second higher number of Covid-19 cases in the world.
This week the good and great of the sugar world should have gathered in London for the bi-annual London sugar week culminating last night at the dinner held at the iconic Guildhall. Sadly, the pandemic has cause its cancellation depriving traders, analysts and brokers the chance to meet up with old friends and clients. Hopefully, by the next dinner in 2022, the pandemic will be an unforgotten but distant memory. Many will also be hoping sugar market will be rather more exciting.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
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