Sugar Market Report for 17 May

Good morning,

Friday saw prices ease lower yet again ending below 17 cents and some 130 points off the highs that were hit a mere two day earlier. The market had opened up 9 points on some early market on opening buying with prices quickly gaining another 25 points over the next 30 minutes. However, once this early buying dried up prices started to slip gradually lower which was, essentially, the story for the rest of the session. By mid-afternoon prices were back to unchanged and it was not long after that the 17 cent level was tested and soon breached with prices settling just 4 points off the lows. Again, the flat price volume was limited with over half the 98.4k lots trades spread related. The NV improved 2 point to end at -10 while the VH slipped 5 points to end at -3. In London the QV finished unchanged at -0.90 while the VZ was a tad weaker at -1.50 with total volume a very disappointing barely climbing above 3k lots. The WP did improve slightly with the NQ WP $2 firmer at 80.50 and the VV WP also firmer at 79.90 but interest was virtually non-existent. The market was again, surprisingly weak, given the good gains earlier in the week and continues to point to the fact that the majority of the buying was speculative in nature. The weakness in the corn market may also have had some impact on the market. The recent rally pulled prices well away from any physical off-take which seems to be limited anyway.

The COT as of the 11th May showed the funds/specs had increased their net long position by 16,856 to 258,572 which was probably slightly less than expectations given the near 100 point improvement in prices during the reporting period. The non-commercials increased their net longs by 13,286 to 193,572. While they may have added to push prices to the new highs mid-week the short term funds have probably cut since so the non-commercials are probably around 190k net long currently. The commercials increased their net shorts by 19,895 to 503,285 as fresh trade selling met with some end-user pricing. Nevertheless they remain under-priced. Last year at the same time the commercials were net short of 168.3k lots while in 2019 they were just 94.3k lots net short. The Index funds increased their net longs by 3,038 to 244,714.

Analysts Tropical Research Services have cut their predicted global surplus for 2021/22 from 5.18 million tonnes to 2.48 million tonnes due to lowering their estimates of production in India, South America and the EU. Nevertheless, they caution on the pandemic cutting their expected global consumption as India continues to be very hard hit by Covid. They also increased their global deficit for the current season to 3.75 million tonnes.

This morning the market opened 4 points firmer before swiftly improving another 8 points with the usual market on opening buying noted. However, since this positive opening prices have fallen back with prices currently holding just above 17 cents. The NV is 1 point better at -9 while the VH is, currently, 2 points weaker at -5. In early London trading the QV is weaker at -1.50 while the VZ is a tad firmer valued at around -1.20. The macro is generally a mostly positive picture this morning with majority of commodities trending slightly higher while the USD Index is slightly weaker. Nevertheless, it is a quiet start to the week. Sugar maybe trying to find a bottom after its rapid falls from the highs of last week. End users need to price but they are probably hoping for prices to slid further with buying likely to be seen below 16.80 The last two rallies have seen the gains quickly given back before improving again. Whether a similar pattern will be seen this time remains to be seen but the buyers are likely to be more wary.

 

 

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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