Good morning,
The market consolidated on Friday remaining in the plus column throughout the session to post an inside day with modest gains by settlement. The market opened 3 points firmer before swiftly improving on some light speculative short covering taking prices up to the day’s highs before any decent selling was found. The market then settled down to trade within a narrow 14 point range for the majority of the session in thin trading volume. A late test of the downside saw enough support at unchanged to stop prices dropping into the negative column and by the close prices had improved to end 10 points firmer on the day but still 57 points down on the week. The KN improved by 3 points to settle at +17 after losing 14 points during the week. The NV also ended 2 points firmer at +5. In London the front spread lost ground again ending at its weakest for some time at +8.50 while the QV was also weaker at +8.90. This meant the WP slipped with the KK WP ending $3.5 weaker at 102.20 while the NQ was also weaker finishing at 97.50. After the losses seen earlier in the week a day of consolidation was not particularly surprising. The trading volume was very limited suggesting uncertainty in the market next move. The macro has been mostly negative during the week with the UDS firmer. The BRL took another battering ending the week at 5.75 on continuing concerns over the economy due to the pandemic which continues to ravage Brazil.
The COT as of the 23rd March showed that the funds/specs cut their net long position by 27,995 to 169,124 which was not particularly surprising given prices fell 125 points during the reporting period. The non-commercials cut their net long by 16,377 to 115,014 as they continued to cut their long exposure. It is likely they have cut further given the continuing weakness of the market can could now be close to just 100k net long. The commercials cut their net short position by 26,254 to 45,462 as end users took advantage of the continuing slide in prices to price. The trade were seen covering shorts. The Index funds increased their net long position by 1,739 to 246,338.
The EU is planting their next beet crop which, currently, looks likely to be lower this season compared to last as farmers look to move to other crops because of low prices and poor yields. Last season the crop ended very poor due to adverse weather and aphid attack causes virus yellow disease as Neonicotinoids sprays were banned. Despite a partial lifting of the use of Neonicotinoids French farmers are expected to plant 6% less beet this year at 400k hectares. In Poland the drilling has not yet started due to cold weather but farmers are expected to plant a slightly reduced area. German plantings are well underway due to good weather but it is too early to estimate hectarage planted. In the UK a larger drop in plantings is expected as farmers lose faith in growing beet. It is estimated that only 90k hectares of beet will be planted which is some 13-15% lower than last season.
This morning the market opened 6 points weaker mainly on a negative macro picture before slipping another few points. Currently, prices are around 5-7 points weaker. The KN is 2 points weaker at +15 while the NV is 1 point weaker at +4. In early London trading the KQ is weaker again at +8.00 while the QV is around unchanged at +8.80. The news that the container vessel that has blocked the Suez canal for nearly a week has been partially re-floated and the canal could soon be open again has seen crude prices drop. The USD index is virtually unchanged but still at around 4 ½ month highs. The sugar market looks likely to remain under pressure with another test of the 15 cent level likely. A breach of this level could trigger more fund long liquidation which could take prices down to the levels last seen in mid-December. However, with still some uncertainty over the Brazilian CS harvest which is starting to crank up it is likely many will take a wait-and-see attitude.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Kevin Watkins, Steven Trigg
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, 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 indeed may incur additional liabilities. These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere.
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Sugar Market Report for 29 March
Good morning,
The market consolidated on Friday remaining in the plus column throughout the session to post an inside day with modest gains by settlement. The market opened 3 points firmer before swiftly improving on some light speculative short covering taking prices up to the day’s highs before any decent selling was found. The market then settled down to trade within a narrow 14 point range for the majority of the session in thin trading volume. A late test of the downside saw enough support at unchanged to stop prices dropping into the negative column and by the close prices had improved to end 10 points firmer on the day but still 57 points down on the week. The KN improved by 3 points to settle at +17 after losing 14 points during the week. The NV also ended 2 points firmer at +5. In London the front spread lost ground again ending at its weakest for some time at +8.50 while the QV was also weaker at +8.90. This meant the WP slipped with the KK WP ending $3.5 weaker at 102.20 while the NQ was also weaker finishing at 97.50. After the losses seen earlier in the week a day of consolidation was not particularly surprising. The trading volume was very limited suggesting uncertainty in the market next move. The macro has been mostly negative during the week with the UDS firmer. The BRL took another battering ending the week at 5.75 on continuing concerns over the economy due to the pandemic which continues to ravage Brazil.
The COT as of the 23rd March showed that the funds/specs cut their net long position by 27,995 to 169,124 which was not particularly surprising given prices fell 125 points during the reporting period. The non-commercials cut their net long by 16,377 to 115,014 as they continued to cut their long exposure. It is likely they have cut further given the continuing weakness of the market can could now be close to just 100k net long. The commercials cut their net short position by 26,254 to 45,462 as end users took advantage of the continuing slide in prices to price. The trade were seen covering shorts. The Index funds increased their net long position by 1,739 to 246,338.
The EU is planting their next beet crop which, currently, looks likely to be lower this season compared to last as farmers look to move to other crops because of low prices and poor yields. Last season the crop ended very poor due to adverse weather and aphid attack causes virus yellow disease as Neonicotinoids sprays were banned. Despite a partial lifting of the use of Neonicotinoids French farmers are expected to plant 6% less beet this year at 400k hectares. In Poland the drilling has not yet started due to cold weather but farmers are expected to plant a slightly reduced area. German plantings are well underway due to good weather but it is too early to estimate hectarage planted. In the UK a larger drop in plantings is expected as farmers lose faith in growing beet. It is estimated that only 90k hectares of beet will be planted which is some 13-15% lower than last season.
This morning the market opened 6 points weaker mainly on a negative macro picture before slipping another few points. Currently, prices are around 5-7 points weaker. The KN is 2 points weaker at +15 while the NV is 1 point weaker at +4. In early London trading the KQ is weaker again at +8.00 while the QV is around unchanged at +8.80. The news that the container vessel that has blocked the Suez canal for nearly a week has been partially re-floated and the canal could soon be open again has seen crude prices drop. The USD index is virtually unchanged but still at around 4 ½ month highs. The sugar market looks likely to remain under pressure with another test of the 15 cent level likely. A breach of this level could trigger more fund long liquidation which could take prices down to the levels last seen in mid-December. However, with still some uncertainty over the Brazilian CS harvest which is starting to crank up it is likely many will take a wait-and-see attitude.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Kevin Watkins, Steven Trigg
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, 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 indeed may incur additional liabilities. These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere.
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.
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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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