Sugar Market Report for 16 June

Good morning,

The market dropped back yesterday but remained within the range of the previous session with a double bottom forming at 16.93. The market had opened 4-5 points firmer but soon slipped below unchanged as renewed selling appeared. This selling soon dried up allowing prices to recover pushing up to the highs of the day by late morning. However, once US traders got to their desks prices started to drop again on renewed fund long liquidation. After an initial swift drop back to the morning lows the descent was more measured but soon saw the front month drop below 17 cents again before enough buying at the previous day’s lows stopped to descent. However, the market settled at its lowest level in three weeks with the N-21 option expiry having little impact. The NV gave back the gains of the previous session to end at -15 while the VH was 1 point weaker at -23. It was a similar story in London with the QV and VZ dropping back to Friday’s levels of -8.60 and -6.80 respectively. This meant the NQ WP weakened to 65.00 while the VV WP also ended weaker at 70.20 but interest was limited at current levels. While some have pointed to the good start to the Indian monsoon and some rain across Brazil’s CS as one reason for the recent slid in prices it is probably more a case of fund liquidation which has been seen across commodities in general over the past few days.

The excellent start to the Indian monsoon suggests more than adequate rains  for the third monsoon in a row and also points to the likelihood of decent rains for Thailand and other Asian producers. Given Brazilian CS production has, as yet, showed no sign of dipping analysts are still predicting a small global surplus for 2021/22. Earlier this week Czarnikow estimated a surplus for next season of 1.5 million tonnes with India producing more than 30 million tonnes despite diverting more cane for ethanol production. They maintain their estimate for a total of just over 35 million tonnes for Brazil’s CS. Their estimate for Thailand is higher than others at 11 million tonnes which would be nearly 60% higher than this season.

China’s sugar production 2020/21 season has ended with total sugar production at 10.66 million tons an increase of 2.4% over last season according to the China Sugar Association. In Russia, according to the Ministry of Agriculture as of last week a total of just over 1 million hectares of sugar beet had been planted around 96.2% of the forecasted area.

This morning the market opened 5 points weaker before slipping another 5 points. Currently, prices are around 6-7 points weaker. The NV and VH are around unchanged in early trading at -15 and -23 respectively. In early London trading the QV is a tad firmer at -8.40 as is the VZ valued around -6.50. The macro is mixed again this morning with crude firmer again while most other commodities are trending slightly higher after the drops of yesterday. The USD Index is also slightly weaker. The sugar market remains under pressure from a lack of nearby demand, improving weather across several major producers. However, good end user pricing is noted building below 16.90. They remain under priced and this drop has certain come at a fortuitous time for them. The funds are cutting longs but it would seem unlikely there will be a wholesale cut in positions for the time being. Nevertheless, the double bottom at 16.93 may trigger more selling is breached. The up-side looks limited but, as seen in the recent past, there is probably limited producer selling above unless prices improve to nearer 18 cents.

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.

 © 2021 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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