Sugar Market Report for 17 July

The market made further gains on Friday improving to its highest level since 26th June. The market had opened 7 points higher and then slowly improved until some resistance was found near the highs of the previous day. During the afternoon further gains were seen with the highs being hit before some liquidation was seen. However, prices soon bounced back to settle near the highs. Nevertheless, the trading volume was, again, disappointing at just over 83k lots. The VH slipped 1 point to -14 while the HK improved by 4 points to end at +142. London saw the expiry of the Q-23 contract. The QV was volatile but, eventually, ended at +15.00 while the volume was very limited at 1,293 lots. The VZ improved to finish at +11.50 and the ZH at +11.90. This meant the VV WP was firmer at 146.50 while the VZ WP was 135.00. It was another quiet day but the market maintained its upward momentum. Continuing concerns over weather across Asia as El Nino begins to bite especially in India and Thailand.

The Q-23 expired in very quiet trade. It is estimated that just 125k tonnes of white sugar was delivered with Man the main receiver. The receiver picked up 80k tonnes of Brazilian sugar with the balance thought to be Indian. Official delivery data will be released by the ICE exchange later today. Traders are likely to see the small delivery at a relatively large premium as bullish although it had been thought the traditional receiver of white sugar had limited option on where sugar would go.

The COT report showed the funds/specs cut their net long position by 5,480 to 114,608 during a week when there was limited market movement. Indeed the closing price on the reports date was the same as the previous week. The non-reportables cut their net longs by 4,344 to 85,435 their lowest level since last October. Since the report date the short term funds have probably reinstated some of their longs but they are still likely to have a net position of below 100k lots. The commercials cut their net short position by 2,363 to 283,324 as the trade were seen on both sides. The Index funds increased their net longs by 3,118 to 168,715 mainly due to cutting of shorts.

This morning the market opened 4 points stronger in very quiet trading. Currently, prices are 6 points weaker. The VH is 1 point stronger at -14 while the HK is unchanged at +142. In early London trading the VZ is weaker at +10.50 while the ZH is also slightly weaker at +11.50. The macro is a mixed picture this morning with crude lower while grains/soya are higher. The USD index is unchanged after its big drop last week. The BRL ended around unchanged at 4.80 on Friday. The market remains well supported and seems likely to continue to improve. However, the market is now some 240 points off the lows so may see a correction before too long. It is likely to be limited. Nevertheless, the trading volume has been poor on this recent run up in prices and traders might be reminded of the old trading adage that no move is substantiated without volume.