Written Commentary
Good morning,
The market remained firm yesterday with new contract highs achieved and their highest level for nearly three years. The market had opened 12 points firmer in the front month hitting 17 cents in early trading. Prices did slip back but another push higher saw a new high put in place. The market then quietened into a narrow 10 point range until early afternoon when another wave of buying saw the highs of the day hit. However, once this buying dried up prices dropped back on some light long liquidation hitting the lows of the day shortly before the close. Nevertheless, buying into settlement ensured prices closed firm with settlement at its highest since late March 2017. The HK remained firm gaining 4 points to finish at +85 while the KN was also 4 points firmer ending at +57. In London it was also another solid performance with the KQ improving slightly to +19.70 while the QV was $1 firmer at +13.90. The WP were barely changed with less interest noted than the previous session. The KK WP settled at around 105.30 and the NQ WP at 98.10. Nearby physical tightness continues to support the market with much of the trade pricing done against the front month while end user prices is still to be done. The OI in H-21 as of COB Tuesday was 149,255 lots with another 75k lots traded yesterday. Early estimates see a delivery anything between 500k tonnes and 1 million tonnes mainly Brazilian and Centrals.
The Federal government of Pakistan is to allow 500k tonnes of white sugar to be imported by the TCP with tender details still to be announced.
According to Czarnikow global sugar consumption will recover back to 2019 levels in 2021. They see global consumption reaching 168.25 million tonnes in 2021 compared to 168.06 million tonnes in 2019. Previously, Czarnikow had seen consumption fall to 163.67 million tonnes last year due to the Covid Pandemic when restrictive measures had an impact on consumption outside the home, dietary habits in various countries as well as logistical difficulties in shipping and delivering sugar.
The 2020/21 beet harvest in Russia has finished. 31.26 million tonnes of beet were processed resulting in sugar production of 5.18 million tonnes which is some 2.6 million tonnes less than last season due to a 18% drop in he planted area due to low prices in the domestic market.
This morning the market opened 4 points higher at 17.00 cents before improving another 6 points in relatively thin flat price volume. The HK is firmer at +88 while the KN is unchanged at +57. Currently prices are holding just above 17.00 cents. In early London trading the KQ is valued slightly higher at +20.00 while the QV is quoted unchanged at +13.90. The macro is mixed this morning with crude again higher but most grains slightly lower. The USD is slightly weaker. The market continues to remain firm and further gains would seem likely as the front month spread continues to increase as the trade continue to roll positions. It would seem unlikely there will be a wholesale collapse in prices in the short term and while the physical tightness remains.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Kevin Watkins, Steven Trigg
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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