Written Commentary
Good morning,
The market slipped back slightly yesterday after failing to breach the high of the previous session thereby forming a double top at 20.10. The market had opened 2 points higher before improving further. The market continued to climb over the next couple of hours to reach the highs of the day but was unable to break any higher than the three week high set the previous day. Prices then started to decline on long liquidation with the market losing 30 points until the lows of the day were reached mid-afternoon. The market held at the lows for a while before improving slightly on the run-up to the close to settle 2-3 points lower on the day. The trading volume was, again, poor failing to reach 74k lots in total. The HK ending 1 point firmer at +30 while the KN was 3 points better at +37. In London business was a little more brisk as the Z-21 expiry approaches. The ZH slipped just over $1 to end at +2.60 while the HK was also a tad weaker at +0.50. The OI in Z-21 dropped by 1,858 lots to 17,542 lots with another 6,858 lots traded yesterday. As suspected the market struggled to move higher after breaching the 20 cent level with limited follow-through buying. A lack of fresh fundamental news means many traders are sitting in the side lines.
Unica will publish their latest harvest data for the second half of October today at 14:00 (London time) and may increase trading activity. During the same period last year the crush reached 26.8 million tonnes with1.73 million tonnes of sugar produced. This season the expected sugar production is expected to struggle to get over 700k tonnes according to a Platts survey as the season comes to an end and the field activities are hampered by rainfall and limited cane availability. However, the market is expecting the predicted 60% drop in production compared to last year when a record production of 38 million tonnes was recorded. If sugar production is in line with expectations then cumulative production should push over 31 million tonnes suggesting total production for the season will struggle to better 32 million tonnes.
According to the USDA the US is on track for record sugar production this season at over 9.33 million short tons. This is mainly due to a large beet crop. France’s farm ministry reported yesterday they see their beet crop production at 34.10 million tonnes virtually unchanged from their last estimate of 34 million tonnes.
This morning the market opened unchanged but quickly improved on market on opening buying improving another 8 points. However, once this buying was completed prices soon eased back and are, currently, around unchanged. The HK is 3 points weaker at +27 while the KN is also 3 down at +34. In early London trading the ZH is $1 firmer at +3.60 while the HK is around unchanged at +0.60. This morning the macro is a slightly positive picture with crude slightly higher as are grains/soya while the USD Index is also firmer and above 94.00 again. The BRL improved yesterday to end valued at 5.49 against the USD. The market looks set to remain range-bound although Unica could spark some volatility with data more likely to be seen as bullish than bearish. The double top at 20.10 is now the up-side target which may trigger some fresh buying if breached.
Contact the ADMISI Sugar Desk team:
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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© 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.
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