Good morning,
The market ended slightly higher yesterday after dropping back towards the recent lows earlier in the session. The market had opened 4 points weaker before pushing into the plus column momentarily. With the macro negative it was not long before prices started to drop with the lows of the day reached mid-morning. Prices held around the lows until US traders got to their desks when some short covering was triggered with prices swiftly improving nearly 30 points over the next 30 minutes. Prices soon fell back as the buying dried up but improved in late trading to end slightly higher on the day. The HK improved by 1 point to end at +36 while the KN finished 3 points firmer at +16. In London things were a bit more volatile with the HK gaining over $5 to end at +16.60 as the H-22 expiry enders it last three trading sessions until expiry. The OI still remains relatively high at 17,590 lots down 1,535 lots. Volume yesterday was just over 13k lots so a larger fall in the OI is expected today. The KQ also improved to +7.20. This meant the HH WP jumped to 100.00 while the KK WP was also slightly firmer at 92.30. It was another relatively quiet day flat price-wise with prices caught within the range seen over the previous three sessions with decent support below 17.80 but little interest to push prices too much higher.
A Reuter’s sugar poll was released yesterday. 10 traders and analysts completed to survey. Raw sugar prices are seen ending 2022 at an average estimate of 17.80 not too far from current levels. White sugar is seen ending the year at $476. This would put the WP at around 83.80. The poll saw an average deficit in production over demand for the current season at 1.25 million tonnes rising to a small 750,000 tonne surplus in 2022/23. The higher prices over the past year has been seen to encourage higher production along with favourable weather for Brazil’s CS which has been beneficial for cane development after many months of drought across the region. The poll had a median forecast of 560 million tonnes for the 2022/23 harvest which will start officially in April. Sugar production is seen at 34.25 million tonnes. Indian sugar production is seen reaching 31.7 million tonnes for the current season dropping slightly to 30.90 million tonnes for next season. It has to be said that, historically, these polls are notoriously inaccurate. Let us hope that is the case otherwise market movement is destined to be limited over the next 11 months!
This morning the market opened unchanged before improving slightly. Currently. Prices are 8 points firmer. The HK is 2 points lower at +34 in early trading while the KN is 1 point weaker at +15. In early London trading the HK is firmer valued at +16.70 while the KQ is weaker valued at +6.50. This morning the macro is mixed with crude slightly weaker while grains/soya and softs are firmer. The USD Index is a tad lower while the BRL remains relatively firm ending at 5.26 last night. The market looks likely to remain range-bound with support at 17.80 and resistance at 18.30 (double top). It is difficult to predict which way it may break out of this range. Much will depend on the macro and the on-going geopolitical concerns but if traders deem the down-side is limited then short covering could see prices push higher with little selling likely to be seen immediately above the market. In London the front spread looks likely to remain firm as the last of positions are rolled.
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.