Sugar Market Report for 8 November

Good morning,
The market improved again Friday with prices just failing to test 20 cents but it was the highest settlement since 12th October. The market opened 2-3 points firmer before slowly slipping lower to hit the day’s lows by mid-morning. However, it was not long before sustained buying appeared which saw prices steadily improve for the rest of the session to hit the day’s highs on the close some 43 points off the lows. The improvement was due, mainly from a positive macro picture with crude prices improving. The technical picture is also positive with prices steadily improving after hitting the recent lows on 19th October with mostly higher lows being seen. The HK improved 6 points to end at +30 while the KN was 7 points firmer at +35. In London it was a slightly different picture as the ZH slipped back to just +1.40 some $3 weaker. The OI in Z-21 dropped by 2,793 to 21,932lots with another 5k traded on Friday. The HK also weakened to a discount closing at -1.00. This meant the WP slipped with the HH WP ending at 66.70 and the KK WP at 74.30. It was a positive performance on Friday as prices climbed back towards 20 cents especially as the structure strengthened slightly.
The COT as of the 2nd November showed the funds/specs had increased their net long position by a marginal 3,397 to 162,533. During the reporting period prices improved before falling back. The non-commercials increased their net long position by 6,905 to 119,022 as short term funds added fresh longs and covered shorts. This increase was probably in line with expectations. The commercials increased their net short position by 3,035 to 349,204 with the trade adding gross longs and shorts. The Index funds cut their net long position by just 363 to 186,671.
The Indian harvest is up and running. About 54 sugar mills in Maharashtra have started crushing cane and have processed 1.035 million tonnes producing around 1.3 million tonnes. Pune and Kolhapur have reported that 30 mills have started crushing operations. No sugar mill in the Nagpur region has started crushing, while only one sugar mill in the Amravati region is operational.
This morning the market opened 5 points firmer before hitting 20.00 cents which remains the high so far. Prices are currently around unchanged. The HK is 1 point firmer at +31 while the KN is also 1 firmer at +36. In early London the structure is slightly improved with ZH valued at around +1.90 and the HK at -0.50. This morning the macro is a relatively positive picture with crude and distillates higher while grains are generally lower. The USD Index is a tad higher at 94.36. It looks as if the market will break above 20 cents for the first time since 14th October but whether it has the legs to push substantially higher remains to be seen. It will probably need a bout of fresh fund buying but they have been reluctant to add significantly to their longs recently and there it probably little reason to believe they will change their stance in the short term. Prices are now back in the range seen between the beginning of September and middle of October so perhaps the market consolidates within this range again.