Good morning,
The market improved yet again on Friday with the spot month hitting its highest level since the H-21 expiry. The structure also improved as positive sentiment continues to grow. The market had opened a couple of points lower before slipping another 12 points in thin flat price volume. However, it was not long before prices rebounded getting back to unchanged by mid-morning. By early afternoon the highs of the previous day were broken with prices initially stalling just shy of 16.50 which saw a short bout of profit taking by the day traders which took prices back to unchanged. However, in the last hour of the session fund buying appeared taking prices up to the highs of the day on the close to settle at their highest level since the 22nd February (basis 2nd month). The trading was, again, heavy with over 213k lots traded. The KN improved another 8 points to settle at +15 and trade longs start to squeeze the remaining shorts. The NV also improved by 5 points to end at +14. In London the QV finished higher at +9.90 while the VZ was also slightly firmer at +3.70. However, with the strength seen in NY the WP slipped a little with the NQ ending $2 lower at 94.70 while the VV WP was also slightly weaker ending at 91.20 but there was limited interest in the WP at these levels. The market continued to improve now some 90 points off the lows reached on the first day of April with combination of positive macro and concerns over Brazilian production and weather issues across several EU producers plus increasing physical demand the main reasons. Additionally, the funds have started to buy again after cutting their longs recently.
Official data from the ICE exchange reported that the London May expiry saw 2,583 lots delivered with Brazil and India the biggest origins (40% Indian) with a small parcel from El Salvador. Man and Wilmar were the main receivers.
The COT as of the 13th April showed that the funds/specs had increased their net long position by 22,425 to 169,711 which was not too surprising given the market improved 60 points during the reporting period. The non-commercials increased their net longs by 16,977 to 117,737 and have probably added another 20k lots since. The commercials increased their net shorts by 16,748 with trade and producers selling into the rally. Additionally, end-user pricing also noted. The Index funds cut their net long position by 5,677 as the re-positioned in front of option expiry.
Indian sugar production hit 29.91 million tonnes as of the 15th April. This is some 15% higher than the same time last year. This is around 30 more mills still crushing at the moment compared with the same time last season. The harvest is now beginning to slowly slow with Maharashtra’s season expecting to end at the end of May. It would now seem likely total production will reach 31 million tonnes which is around past expectations.
After France reported huge damage to their newly planted beet crop due to unseasonal frosts Germany has reported that, at least, 10% of their planted sugar beet has been destroyed by frost and another 20-30% of the areas have been seriously affected by frosts in early April. Farmers are continuing to assess the damage and more information will be released before long.
Russian sugar beet area is likely to increase by over 13% this season according to the Ministry of Agriculture. The total area could exceed 1 million hectares which could, with decent weather, produce around 6 million tonnes of sugar. As of 15th April around 11% of the forecasted area had been planted.
This morning the market opened 5 points lower before dropping another 8 points in thin flat price volume. Currently, prices are holding around 3-4 lower. The KN is a couple of points weaker at +13 while the NV is unchanged at +14. In early London trading the QV is slightly weaker at +9.00 while the VZ is around unchanged at +3.70. The macro is mixed this morning with crude slightly lower while grains are higher while the USD index is a tad weaker. The market looks well supported and could continue to improve especially if the funds continue to reinstate longs. However, some might question whether there is any justification for prices to rise much more. India production will continue to add to stocks and Indian mills will continue to look for export opportunities. However, if the funds continue to buy then the market is very likely to continue to strengthen with 17 cents the next up-side target.
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Sugar Market Report for 19 April
Good morning,
The market improved yet again on Friday with the spot month hitting its highest level since the H-21 expiry. The structure also improved as positive sentiment continues to grow. The market had opened a couple of points lower before slipping another 12 points in thin flat price volume. However, it was not long before prices rebounded getting back to unchanged by mid-morning. By early afternoon the highs of the previous day were broken with prices initially stalling just shy of 16.50 which saw a short bout of profit taking by the day traders which took prices back to unchanged. However, in the last hour of the session fund buying appeared taking prices up to the highs of the day on the close to settle at their highest level since the 22nd February (basis 2nd month). The trading was, again, heavy with over 213k lots traded. The KN improved another 8 points to settle at +15 and trade longs start to squeeze the remaining shorts. The NV also improved by 5 points to end at +14. In London the QV finished higher at +9.90 while the VZ was also slightly firmer at +3.70. However, with the strength seen in NY the WP slipped a little with the NQ ending $2 lower at 94.70 while the VV WP was also slightly weaker ending at 91.20 but there was limited interest in the WP at these levels. The market continued to improve now some 90 points off the lows reached on the first day of April with combination of positive macro and concerns over Brazilian production and weather issues across several EU producers plus increasing physical demand the main reasons. Additionally, the funds have started to buy again after cutting their longs recently.
Official data from the ICE exchange reported that the London May expiry saw 2,583 lots delivered with Brazil and India the biggest origins (40% Indian) with a small parcel from El Salvador. Man and Wilmar were the main receivers.
The COT as of the 13th April showed that the funds/specs had increased their net long position by 22,425 to 169,711 which was not too surprising given the market improved 60 points during the reporting period. The non-commercials increased their net longs by 16,977 to 117,737 and have probably added another 20k lots since. The commercials increased their net shorts by 16,748 with trade and producers selling into the rally. Additionally, end-user pricing also noted. The Index funds cut their net long position by 5,677 as the re-positioned in front of option expiry.
Indian sugar production hit 29.91 million tonnes as of the 15th April. This is some 15% higher than the same time last year. This is around 30 more mills still crushing at the moment compared with the same time last season. The harvest is now beginning to slowly slow with Maharashtra’s season expecting to end at the end of May. It would now seem likely total production will reach 31 million tonnes which is around past expectations.
After France reported huge damage to their newly planted beet crop due to unseasonal frosts Germany has reported that, at least, 10% of their planted sugar beet has been destroyed by frost and another 20-30% of the areas have been seriously affected by frosts in early April. Farmers are continuing to assess the damage and more information will be released before long.
Russian sugar beet area is likely to increase by over 13% this season according to the Ministry of Agriculture. The total area could exceed 1 million hectares which could, with decent weather, produce around 6 million tonnes of sugar. As of 15th April around 11% of the forecasted area had been planted.
This morning the market opened 5 points lower before dropping another 8 points in thin flat price volume. Currently, prices are holding around 3-4 lower. The KN is a couple of points weaker at +13 while the NV is unchanged at +14. In early London trading the QV is slightly weaker at +9.00 while the VZ is around unchanged at +3.70. The macro is mixed this morning with crude slightly lower while grains are higher while the USD index is a tad weaker. The market looks well supported and could continue to improve especially if the funds continue to reinstate longs. However, some might question whether there is any justification for prices to rise much more. India production will continue to add to stocks and Indian mills will continue to look for export opportunities. However, if the funds continue to buy then the market is very likely to continue to strengthen with 17 cents the next up-side target.
Contact the ADMISI Sugar Desk team:
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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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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