Good morning,
The
market saw an inside day yesterday as prices continue to consolidate in the
middle of the range seen over the past month. The H-22 expiry was a quiet
affair with the front spread ending at +30. The market had opened 17 points
firmer on the back of continuing crude strength and surging grain and soya prices
due to the Russian invasion of Ukraine. The opening buying soon
evaporated with prices soon slipping 20 points from the high of the day to the
low over the next 40 minutes. Prices then remained within a 12 point range
until early afternoon with good support noted at just below 17.60. There was a
short improvement in prices mid-afternoon when prices recovered back to opening
levels but, again, the buying soon petered out with prices falling back to the
bottom half of the day’s range by settlement. The KN improved by 7 points to
end at +19 but remains well within the range seen over the past two months. The
NV also improved 7 points to end at -9. In London the KQ continued to remain
firm ending at +12.70 while the QV finished at +6.70. This meant the KK WP
remains at over 105.00 while the VV WP ended at 88.60. It was a quiet day with
total trading volume just failing to reach 100k lots as many traders are taking
a very cautionary view of the market at the moment. Some investment managers
are cutting risk and liquidating positions looking for safer havens for funds
after the Russian/Ukraine conflict started. However, it could also be argued
that some are having to move funds to other commodities.
The
March 22 expiry was, as mentioned, quiet ending unchanged on the day.
Preliminary information suggests the delivery was the largest ever for a March
expiry. A total of 26,000 lots (1.32 million tonnes) were delivered. It is
thought Alvean were the largest deliverer of around 620,000 tonnes with other
trade houses also involved to a lesser extent while Sucden were the sole
receiver. Around 75% of the sugar will be delivered from Brazilian ports while
the rest will be Centrals (Guatemala and Honduras). The large delivery will be
seen as bearish although, it could be argued, the shift of sugar from one large
trade house to another is fairly neutral. Nevertheless, some will see the need
for Alvean to deliver Brazilian sugars would suggest limited demand.
The
ISO reported yesterday that they have cut their global deficit expectations for
the current season by 620k tonnes to 1.93 million tonnes due to a downward
revision of the consumption expectations and a slight increase in production.
The ISO concluded that the modest deficit would be covered by buffer stocks
with India plugging supply gaps caused by the drop in Brazilian production. The
report did see stocks ending lower by the end of the season but also note there
is less interest in holding them. Their medium term outlook is neutral to
bearish with the market well supplied once the next Brazilian CS harvest
starts.
Egypt
will look to import 300k tonnes of sugar this year which includes the 100k
tonnes already purchased. The supply Minister said that the country is already
87% self-sufficient for sugar and will become 100% after a new factory comes on
line thereby cutting another export destination.
This
morning the market opened 2 points firmer in a quiet, post-expiry, mood
although prices soon improved and are, currently, 8-9 points firmer. The KN and
NV are both unchanged at +19 and -9 respectively. In London the KQ is firmer in
early trading at +13.90 while the QV is also slightly firmer at +7.10. The
macro is, again positive with crude and grains/soya higher. Brent is back over
$100. The USD index remains near its recent highs but unchanged at the moment.
The continuing volatile and very uncertain situation in Ukraine will continue
to dominate proceedings. The market is, currently, range bound between 17.50
and 18.10 and, for the time being, it would seem unlikely to move out of this
range to any great degree.
Contact the ADMISI Sugar Desk team:
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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A subsidiary of Archer Daniels Midland Company.
© 2022 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.
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