Written Commentary
Good morning,
The market recovered from making another low for the move filling the chart gap formed on Monday and Tuesday. The market had opened 1 point firmer before recovering slightly. However, late morning more selling appeared taking prices down to their lowest level since 13th May. However, good buying was found at below 18.90 and this soon triggered some short covering which quickly escalated into a more full-blown rally with prices gaining 60 points in the space of just over an hour. Eventually the chart gaps which formed the island reversal on Tuesday were filled. Once done prices swiftly dropped back eventually settling off the highs but with good gains on the day. The NV improved by 3 points to close at -22 while the VH was just 1 point firmer at -35. In London the spot month has resumed its strength to end firmer with the QV up $5 at +27.20 while the VZ was $2 firmer at +16.50. This meant the WP improved again after some profit taking with the VV WP finishing at 121.40 and the VZ at 104.90. The market saw a good bounce off the lows yesterday suggesting the bottom of the move is now in place for the time being. There was no one particular piece of news to trigger the rally but the strength of London, chatter of some raw sugar physical off-take and the imminent release for the Unica data for second half of May may have combined to get the shorts to cover.
Unica will release their harvest data for the second half of May this afternoon at 15:00 (London time). During the same period last year a total of 43.2 million tonnes of cane were crushed producing 2.62 million tonnes of sugar with a 46.34/53.66 sugar/ethanol split. A Platts survey earlier this week estimated a total crush for the period of 41.6 million tonnes (range 37.3 to 43.3 million tonnes) with 2.17 million tonnes of sugar. The split is expected to improve slightly but still below same time last season at 42.4/57.6. While the crush and sugar production is catching up with last season after a very slow start it is now a question of whether cumulative totals can catch up over the coming months. Currently, the best that could be hoped is total production ends up at around unchanged from last season at 32 million tonnes. However, long time to go and the harvest tail maybe longer than last season.
This morning the market opened 1 point higher but soon dropped slightly only to recover back to opening levels where prices currently remain. The NV is 2 points firmer at -20 while the VH is 1 point weaker at -36. In early London trading the QV is weaker at +26.10 as is the VZ at +15.60. The macro is a negative picture this morning with virtually all commodities trending lower. However, the USD index is also slightly weaker. It maybe quiet until release of Unica report. While it maybe in line with expectations it is likely to disappoint and remind the market that Brazilian CS production is not going to dramatically improve and could struggle to reach last years low total. However, a rally above 20 cents would seem unjustified. Apart from Unica the monthly USDA report will be out this afternoon which may impact on grains and have a knock on impact.
Contact the ADMISI Sugar Desk team:
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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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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