Sugar Market Report for 27 October

Good morning,

Prices improved again yesterday in part due to bullish Unica data and a positive macro picture. The market has now regained most of the losses of last week and is now back in the range seen sine the beginning of September. However, the trading volumes remain very subdued at just under 76k lots. The market opened a couple of points lower and then quickly settled into a narrow 11 point range until just before the release of the Unica data when prices started to improve. Further gain were seen after its publication with prices gaining another 25 point points to hit the highs of the day mid-afternoon. Prices then remained at the higher levels for the remainder of the session settling at its highest level since 15th October. The HK ended the session unchanged at +40 while the KN was 4 points firmer at +33. In London the ZH was a tad lower at +6.70 while the HK improved to +1.00. This saw the WP end around unchanged with the HH WP at 71.20 and the KK WP at 79.00. The Unica data which showed a marked drop in the crush and sugar production more than had been expected. However, somewhat ironically, the main reason for the drop was the rain that fell during the period that hampered and delayed field work.

Unica data for 1st half of October showed a crush of 19.68 million tonnes producing 1.14 million tonnes of sugar both somewhat below expectations. The spilt ( 39.11/60.89) also move more in favour of ethanol as prices improve. Agricultural yields continue to lag well behind last season at 69.6 m/t per hectare (April to September) vs 82.4 m/t last year. It now looks as if total sugar production will be around 32 million tonnes down 6 million from last season.

Datagro reported yesterday they see a marginal recovery on the next Brazilian cane crop due to better rains over the past few weeks. They see a cane crop of between 530 and 565 million tonnes producing between 31.6 and 33.7 million tonnes versus 31.9 million tonne expectation for the current season. They expect mills to increase crop care as the rains improve soil moisture and cane development conditions. More rain is forecast over the next 10 days at least.

This morning the market opened 6 points lower this morning before slipping another 6 points mainly on the back of a weaker macro picture. Currently prices are around 6 points weaker. The HK and KN are a tad weaker at +39 and +31 respectively. In early London trading the ZH is a tad firmer at +7.20 as is the HK valued around +1.50. The macro as mentioned is negative this morning with energy down and most agricultural contracts lower as well as metals. The USD index is also slightly weaker. Despite bullish Unica data the market continues to react to the macro. Nevertheless, it would seem unlikely prices will collapse and may improve during the session. However, a return to the highs of over 20.50 would seem unlikely for the time being.

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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