Good morning,
The market consolidated on Friday following the macro inspired drop on Thursday albeit in thin trading volume. The market had opened 5 points firmer but quickly improved another 17 points. However, unable to improve further prices slipped back to the lows of the previous session thereby forming a triple bottom at 25.99-26.01. With the support holding more buying appeared taking prices up to the highs of the day by mid-afternoon before slipping back to opening level shortly before the close before some late day-trader liquidation saw prices end in the middle of the day’s range. The NV improved 3 points to end at +36 while the VH was 6 points higher at +46. In London the QV jumped $2 to finish at +10.30 while the VZ ended $2.50 firmer at +11.70. This meant the WP also improved with VV WP at 134.70 and the VZ at 123.00. It was somewhat inevitable prices would improve once the macro turned better although the gains were probably less than some had expected given the positive fundamental picture. The uncertainty was emphasised in the volume that just managed to creep over 100k lots.
The COT report as of the 9th May showed the funds/specs increased their net longs by 9,412 to 218,290. The majority of the gains were by the non-commercials who increased their net longs by 9,577 to 164,637. An increase was expected given prices improved just over 100 points during the reporting period. However, it does continue to emphasise the longer term funds reluctance to extend their longs at current levels. The commercials saw good activity with both gross longs and shorts adding to positions as producer selling and end-user pricing was noted. Overall the result was a net gain in the net shorts by 5,876 to 356,993. The Index funds cut their net longs by 3,537 to 138,704.
The USDA released their monthly report on Friday. From a sugar perspective they see a slight fall in beet sugar output in 2023/24 due to delays in plantings. Total production is seen at 9.22 short tonnes down 600k short tonnes from 2022/23. They also see imports at 3.3 million short tonnes which will see the stocks to user ration drop from 13.5% to 11.3%. The USDA see Mexican exports to the US at 1.51 million tonnes which may be optimistic given their cane crop has suffered from dry weather.
This morning the market opened 8 points firmer before improving further. Currently, the market is 14 points firmer. The NV is unchanged at +37 while the VH is 1 points better at +47. In early London trading, the QV is a tad firmer at +10.30 while the VZ is unchanged at +11.70. This morning the macro is mixed with crude lower while grains/soya slightly higher. The USD Index is a tad lower while the BRL ended at 4.92 on Friday. The market looks very well supported and seems more likely to test the recent highs than fall significantly below 26 cents with the fundamental picture continuing to remain very positive and enough uncertainty over weather prospects for major producers over the coming few months.
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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