Written Commentary
The markets improved again on Friday but remained within the range seen throughout the week. The market had opened unchanged and remained very quiet. Eventually, prices came under selling pressure which saw prices dropped to the lows of the day a couple of hours after the opening. However, prices immediately started to slowly improve getting back to unchanged by the time US traders got to their desks. Early afternoon sae a 20 minutes period when prices improved another 25 points before selling was found at 16.50. Prices did improve further hitting the day’s highs about an hour before settlement and momentarily broke above the double top at 16.53. However, the buying was limited with prices soon slipping back to settle at the highs of the previous session. The KN ended unchanged at +56 as did the NV at +16. In London the structure weakened slightly with the KQ dropped back a tad to +15.70 as did the QV ending at +10.50. This meant the WP was also slightly weaker with the KK WP down $1.60 at 101.90. The NQ also ended weaker at 98.60. It was a pretty non-descript session with limited trading volume and interest. However, the performance was positive given the macro and that coffee and cocoa dropped as the BRL slid again to 5.684 by its close. Traders remain cautious of another spot month squeeze given the fundamental picture has not changed considerably since the expiry of the H-21 with concerns over freight issues and lower than anticipated production in India and continuing uncertainty over the size of the next Brazilian CS cane crop although good rains have been received in the past 24 hours.
The COT as of the 2nd March showed that the funds/specs cu their net long position by 16,869 to 219,720. This drop was expected with prices losing just under 100 points during the reporting period. The non-commercials cut their net longs by 13,449 to 149,223 as they continued to trim their position suggesting they have ample ammunition to buy again if they so desire. The commercials cut their net short position by 20,881 to 472,433 as they cut both gross longs and shorts probably a consequence of the H-21 expiry. The Index funds also cut their net long position by 4,012 to 252,714.
Pakistan’s TCP issued have another 50k tonne tender for white sugar after they failed to purchase from the previous tender which ended Friday when just two offers was submitted. The date for offers is the 16th March. Rapid shipment is sought in two weeks plus voyage time for either 10k tonnes in containers or 25k in bulk with phased delivery for the remainder of tender.
This morning the market opened 10 points firmer on the back of a positive macro picture with Brent crude at its highest level since 10th January 2020. The KN is a couple of points firmer at +58 while the NV is 1 point better at +17. Currently, prices are holding just under opening levels at 7-8 points firmer. In early London trading the KQ is stronger at +16.30 as is the QV valued around +11.20. Apart from crude being higher most other commodities are trending higher despite a strong USD index quote. Sugar looks set to improve further on the back of a positive macro picture and continuing concerns over supply until the Brazilian harvest gets into top gear.
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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