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Sugar Market Report for 14 March

Good morning,


Friday saw a much quieter day than of late as prices started to consolidate over 19 cents. The market had opened 2 points firmer but soon dropped away on some early long liquidation. Prices remained under pressure to hit the lows of the day as US traders got to their desks. However, good support was found above 18.80 with prices soon recovering back into the plus column where they remained for the rest of the session pushing up to the highs of the day on the close. The KN ended 1 point firmer at +5 while the NV was 4 points better at -6. In London it was quiet with the KQ ending a tad firmer at +10.10 while the QV was also firmer at +5.90. The WP was quiet with the KK WP ending virtually unchanged at 106.00 while the VV WP was a tad firmer finishing at 89.80. The market appeared to take a breather after the volatility of the past 10 sessions. Indeed that seemed to be the case for many markets. Nevertheless, the market appears to be looking to build into a new range of 18.50 to 19.50. Obviously, much will depend on the on-going conflict in Ukraine and the impact on crude prices. There is a growing view that Brazil CS mills will push more cane into ethanol production but much will depend on crude prices and the Brazilian government’s fuel policies.

 
The COT as of the 8th March showed that the funds/specs had massively increased their net long position by 82,319 to 139,312 as prices surged nearly 220 points during the reporting period. The non-commercials increased their net longs by 63,497 to 99,091 as gross shorts covered and gross longs bought afresh. Few will be surprised by the changes. The commercials increased their net short position by a huge 89,088 as producers priced – mainly Indian and Thai with limited pricing by Brazilian mills. There was virtually no change to the gross longs with end-destination seemingly doing very little. The Index funds increased their net long position by 6,769 to 202,828.


At the Dubai sugar conference the CEO of Raizen said that global sugar prices will structurally change as demand from India falls and more volatility is seen due to energy prices due to the Ukraine conflict. He also said he did not expect an increase in Brazilian CS sugar production and production costs will increase. Al Khaleej Sugar’s Canal sugar unit in Egypt will begin production in April according to the Managing Director, Jamel Al Ghurair. He did admit that the Dubai refinery was not working at full capacity and said the biggest current risk is uncertainty caused by pandemic and Ukraine crisis. He also said that the company was keen to copy the Egyptian model in Spain which has logistical advantages.


This morning the market opened 4 points weaker but immediately dropped another 17 points on good market on opening selling due to crude being 3% lower. Currently, prices are 17-18 points lower. The KN is unchanged at +5 while the NV is 2 points weaker at -8. In early London trading the KQ and QV are both a tad firmer at +10.50 and +6.10 respectively. The macro is bearish this morning with crude and most other commodities lower. Crude has fallen due mainly to a view that peace talks between Russia and Ukraine are seen as relatively positive and some progress has been made. Whether this leads to a change in the situation remains very uncertain and the market will remain poised to react to any changes. The likelihood that the Fed will increase US interest rates this week is also adding to some pressure on commodities as the USD may improve on any rate rise, although, a rise has been expected for some time as inflation hits 7.9% in last data. The sugar market will remain beholden to the wider picture but support is building below 19 cents. The producer selling noted when prices rallied is now likely to be around the top end of the recent range so a swift improvement in prices could be seen if the Ukraine crisis turns worse.

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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