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Weekly Sugar Wrap

Written by Howard Jenkins, Head of Global Commodities, ADM Investor Services International Limited

The week has seen prices continue to improve mainly on fund buying. However, in an attempt to put a fundamental slant on the continuing rally chatter about dry weather across the Brazilian cane regions and the possibility of a late and slow start to the Indian harvest have been cited. The former may have some validity but India does appear to be gearing up for a big production figure after a very decent monsoon season.

The biggest excitement of the week was the October expiry which saw the largest delivery ever. Just under 2.58 million tonnes was delivered virtually all from Brazil slightly debunking the dry weather concerns. The usual debate on whether such a large delivery is bullish or bearish continues. Too much sugar available or a sign of good demand – perhaps only the sellers or buyers know. Suffices to say, in the past, very big or small deliveries generally have no long term impact on prices.

Most analysts see the dry weather in Brazil as something to be monitored at the moment with some believing there is no reason to get too concerned until early next year. The news that La Nina has developed and, therefore, might cause dry weather across southern South America may have caught the attention of the fund managers but, as seasoned traders knows, predicting weather issues is notoriously perilous. Sugar cane is, after all, very resilient.

This morning we wake up to the news that President Trump and his wife has tested positive to Covid-19 which has seen mixed views across the world. Nevertheless, the news has caused the equity markets to tumble pulling most commodities lower including sugar. Some will point to the recent low trading volume in sugar as a sign that the recent sugar rally is built on questionable foundations. Time will tell on whether both President Trump and sugar recover unscathed.

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 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.

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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