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Sugar Market Report for 1 March

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

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.

 © 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.

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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