Good morning,
The market dropped back yesterday to settle at its lowest level since 20th April despite improving earlier in the shortened session due to a Bank holiday in the UK. The market had opened 4 points firmer and had continued to improve throughout the early afternoon gaining another 30 points in thin volume before a bout of selling appeared which saw prices slid lower for the rest of the session settling just 4 points off the day’s lows. The NV ended unchanged at +5 while the VH finished at -4. Friday had seen prices end marginally higher as the market tried to consolidate after the plus 130 point drop from the highs seen earlier in the week. The K-21 expired in quiet trading with just 11,351 lots delivered. The biggest feature on Friday was the weakening of the front month in London which saw the QV end at a discount of -1.70 having lost over $4.5 on the day. The collapse had many scratching the heads on the reasons why but, possibly, a speculative long getting out of their position as the selling was fairly aggressive.
As mentioned above K-21 expired quietly with a total of 576,660 tonnes (11351 lots) delivered just 25% of the record delivery against K-20. Apart from a small Nicaraguan parcel all the sugar delivered with Brazil from Santos and Paranagua. Louie Dreyfus was the largest receiver and Chinese commodity house Honors Commodity a smaller receiver while Raizen was the biggest deliverer which also included Sucden, Tereos, Glencore and Czarnikow. The small delivery will be seen by some as an indication of limited sugar while it could be argued there was little desire to take delivery. Although the KN did settle at +38 in late trading, from +15 the previous session, it was a far cry from the massive 108 premium the H-21 settled at on expiry.
The COT showed the funds/specs had increased their net long position by 30,047 to 250,125 which was probably a little less than expected. The non-commercial increased their net longs by 30,373 to 190,414. Since last Tuesday it is likely their have trimmed the position slightly to around 175k lots. The commercials increased their net short position by 37,699 to 492,255 on producer selling and some trade long liquidation. The Index funds increased their net long position by 7,649 to 242,130.
The main focus of traders, at the moment, is the Brazilian CS harvest which is seeing analysts cutting the expected cane crop as the dry weather continues to take its toll on the cane. However, most are seeing sugar production continuing to be a priority and have not cut their estimates so much. Stone X now see total cane crush at between 567-578 million tonnes but have not reduced their expected sugar production which remains a just under 36 million tonnes. The Brazilian consultancy, Job, see the cane crop at 576 million tonnes but still see sugar production at a healthy 37.2 million tonnes. It will continue to be very much a guessing game for the time being on total production with many factors to take into account before traders are confident in total output.
Indian sugar production reached just shy of 30 million tonne by the end of April. This is about 16% higher year on year compared with last season. A total of 106 mills were still crushing at the end of April with most completing operations for the season within the next couple of weeks although some in UP may continue to the end of May. A total of 31 million tonnes should be achieved by the time all mills cease operations.
This morning the market opened 3 points firmer before improving another 6 points in this volume. The NV is unchanged at +5 while the VH is 1 point firmer at -3. Currently, prices are holding around 7-8 points firmer. In early London trading there is little sign of the front spread improving currently valued around -2.10 while the VZ is around unchanged at -2.10. The macro is mixed this morning with crude slightly weaker while grains/soya are slightly firmer. The USD index is firm again today. The market has seen increasing volatility recently which is likely to continue as the market remains nervous over the Brazilian CS cane crop prospects. The funds, having increased their net long position to just under 200k, look as if they may be taking a breather for the time being. The market would seem well supported from 16.50 but, at the moment, there would seem little reason for prices to break decisively over 18 cents.
Sugar Market Report for 4 May
Good morning,
The market dropped back yesterday to settle at its lowest level since 20th April despite improving earlier in the shortened session due to a Bank holiday in the UK. The market had opened 4 points firmer and had continued to improve throughout the early afternoon gaining another 30 points in thin volume before a bout of selling appeared which saw prices slid lower for the rest of the session settling just 4 points off the day’s lows. The NV ended unchanged at +5 while the VH finished at -4. Friday had seen prices end marginally higher as the market tried to consolidate after the plus 130 point drop from the highs seen earlier in the week. The K-21 expired in quiet trading with just 11,351 lots delivered. The biggest feature on Friday was the weakening of the front month in London which saw the QV end at a discount of -1.70 having lost over $4.5 on the day. The collapse had many scratching the heads on the reasons why but, possibly, a speculative long getting out of their position as the selling was fairly aggressive.
As mentioned above K-21 expired quietly with a total of 576,660 tonnes (11351 lots) delivered just 25% of the record delivery against K-20. Apart from a small Nicaraguan parcel all the sugar delivered with Brazil from Santos and Paranagua. Louie Dreyfus was the largest receiver and Chinese commodity house Honors Commodity a smaller receiver while Raizen was the biggest deliverer which also included Sucden, Tereos, Glencore and Czarnikow. The small delivery will be seen by some as an indication of limited sugar while it could be argued there was little desire to take delivery. Although the KN did settle at +38 in late trading, from +15 the previous session, it was a far cry from the massive 108 premium the H-21 settled at on expiry.
The COT showed the funds/specs had increased their net long position by 30,047 to 250,125 which was probably a little less than expected. The non-commercial increased their net longs by 30,373 to 190,414. Since last Tuesday it is likely their have trimmed the position slightly to around 175k lots. The commercials increased their net short position by 37,699 to 492,255 on producer selling and some trade long liquidation. The Index funds increased their net long position by 7,649 to 242,130.
The main focus of traders, at the moment, is the Brazilian CS harvest which is seeing analysts cutting the expected cane crop as the dry weather continues to take its toll on the cane. However, most are seeing sugar production continuing to be a priority and have not cut their estimates so much. Stone X now see total cane crush at between 567-578 million tonnes but have not reduced their expected sugar production which remains a just under 36 million tonnes. The Brazilian consultancy, Job, see the cane crop at 576 million tonnes but still see sugar production at a healthy 37.2 million tonnes. It will continue to be very much a guessing game for the time being on total production with many factors to take into account before traders are confident in total output.
Indian sugar production reached just shy of 30 million tonne by the end of April. This is about 16% higher year on year compared with last season. A total of 106 mills were still crushing at the end of April with most completing operations for the season within the next couple of weeks although some in UP may continue to the end of May. A total of 31 million tonnes should be achieved by the time all mills cease operations.
This morning the market opened 3 points firmer before improving another 6 points in this volume. The NV is unchanged at +5 while the VH is 1 point firmer at -3. Currently, prices are holding around 7-8 points firmer. In early London trading there is little sign of the front spread improving currently valued around -2.10 while the VZ is around unchanged at -2.10. The macro is mixed this morning with crude slightly weaker while grains/soya are slightly firmer. The USD index is firm again today. The market has seen increasing volatility recently which is likely to continue as the market remains nervous over the Brazilian CS cane crop prospects. The funds, having increased their net long position to just under 200k, look as if they may be taking a breather for the time being. The market would seem well supported from 16.50 but, at the moment, there would seem little reason for prices to break decisively over 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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