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Sugar Market Report for 4 February

Good morning,

The market hit a 3 ½ week low yesterday before a marginal recovery was seen which saw prices end in the plus column but still some 50 points below Tuesday’s high and just below 18 cents. The market had opened unchanged but swiftly improved some 10 points on some early buying. However, with the macro picture turning negative and bearish Indian production figures prices soon started to slip with the lows of the day reached mid-morning. The selling soon tried up and with that prices started to improve as more speculative short covering. A couple of buy stops were triggered as prices broke back above 18 cents which saw the highs of the day hit late afternoon but, again, the short covering petered out with prices slipping some 13 points off the highs by settlement. The HK slipped 3 points to +29 while the KN was unchanged at +15. In London the HK lost $2 to end at +9.50 while the KQ was also weaker at +6.20. With a week to go until H22 expiry in London the OI remains above 20k lots only falling marginally on Wednesday. Little chatter regarding deliveries but it is looking as if it will be a delivery of around 500k tonnes at the moment. The WP improved again with HH WP hitting 95.90 and the KK WP at 92.80. Whether the bottom was reached yesterday remains to be seen but there appeared little desire to drive prices lower in the short term. Nevertheless, the market remains weak with the funds looking elsewhere for opportunities.

Like the Indian harvest the Thai harvest continues apace. As of the 30th January the crush had reached 47.7 million tonnes which is some 23% higher year on year. Total sugar production reached 4.94 million tonnes up just over 20% from same time last season. The sugar content is 1.9% lower compared with last year when conditions were very dry. Analysts are now pencilling in a total crush of around 90 million tonnes with total sugar production likely to reach 10 million tonnes which would be around 24% up on last season’s very poor total of 7.57 million tonnes.

World food prices increased in January according to the UN food agency. The FAO food index averaged 135.7 points in January against an upwardly revised 134.1 in December. The main driver for the higher index is in vegetable oils.

This morning the market opened 2 points firmer but soon started to improve further with prices currently 12 points firmer. The HK and KN are both unchanged in early trading at +29 and +15 respectively. In early London trading the HK is barely changed at +9.60 while the KQ is a tad firmer at +6.50. The macro is an overall positive picture this morning with virtually all commodities trending higher and the USD Index a tad weaker. While the macro will continue to influence sugar prices to a certain extent it does seem as fundamental considerations are now to the fore with increasing production in India and Thailand and increasing prospects for the Brazilian CS crop as it continues to rain across the region. Nevertheless, as mentioned before, there is still questions on how well the cane can recover after months of dry weather and several nights of frosts and the answer will not become clear until the crush gets well underway. In the meantime prices are likely to hold above 17.60 (low of January) but probably will struggle to break significantly above 19 cents.

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.

 © 2022 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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