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Sugar Market Report for 18 August

Good morning,

The market ended around unchanged after making a new high for the move in early trading. The market had opened 1 point lower before improving slightly. A sharp gain, triggered by a buy stop, of 30 points was seen around 40 minutes after the opening pushing prices up through the previous day’s highs to a new 4 ½ year high probably on the back of news from India that the Government are unlikely to approve an export subsidy programme for next season. Prices remained firm making the highs for the day around mid-morning before slowly easing lower on long liquidation. By mid- afternoon prices had dipped below 20 cents as the liquidation continued after the market had become, technically, over bought and the macro turned negative. The market remained at the bottom end of the range through to the close when some day-trader short covering lifted prices back to unchanged. The VH finished 1 point weaker at -61 while the HK was 6 points weaker at +106. In London the market continued to improve with the VZ finishing nearly $4 firmer at -12.80 while the ZH was also a bit better at -6.20. The VV WP continued to surge higher reaching 60.00 by the close while the HH WP was also slightly firmer at 65.60. The market held well yesterday as the macro turned negative as the USD surged as traders took a risk averse attitude. However, the market had become over-bought after surging over 250 points in a fortnight so some consolidation was, probably, inevitable.

An Indian government official, Sudhanshu Pandey, announced yesterday that India is expected to withdraw sugar export subsidies for the new session after global sugar prices improved over the past year. Prices have improve by over 30% since the beginning of the current season and prices are now well above levels at which Indian exporters can sell both raw and white sugar without subsidy. This news will have come as no great surprise although it did trigger about of buying. The Indian government will be mightily relived no subsidy will be needed after the economy has been hit hard by the pandemic. Other larger sugar exporters will also be relived they are not competing against subsidised exports. It is thought Indian mills have contracted to export around 725,000 tonnes of raw sugar and 75,000 tonnes of white sugar for shipments from November to January.

This morning the market opened 1 point lower but soon pushed into he plus column on market on opening buying before easing back. Currently, prices are holding 6 points up on the day. VH is unchanged at -61 while the HK is 2 points firmer at +108. In early London trading the VH is again firmer valued around -11.60 while the ZH is valued unchanged at -6.20. The macro has stabilised after the negativity of yesterday with crude slightly higher while grains/soya are sightly lower. The USD Index is slightly lower this morning after the large gains of yesterday. It would seem Sugar will remain firm although whether there is the justification to push much higher is debatable. It has been a swift rally over the past couple of weeks and it might be time for traders to take stock of the situation. A global deficit in production for next season is probably a foregone conclusion and it now remains to see how big. Obviously, much will depend on the total Brazilian CS production but with Indian sales continuing to plug supply gaps and demand remaining rather muted perhaps H-22 nearing 21 cents is high enough. However, much will depend on the funds appetite. They are, probably, currently, over 200k lots net long – whether they see the up-side potential enough to add remains to be seen

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.

 © 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.

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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