Sugar Market Report
Friday saw prices drop again with prices settling below 12 cents for the first time since late July. The market had opened a couple of points firmer but soon encountered some follow-through selling after the weak previous close. Prices did manage to improve mid-morning as a bout of short covering noted with the highs of the day hit. However, the improvement was short lived with prices soon slipped back into negative territory. Prices then remained weak for the rest of the session. Values dropped to the lows mid-afternoon dropping below 11.90 momentarily. Prices did manged to struggle back to 12 cents but selling was waiting and prices slipped lower by the close to settle weak. The spreads were a little quieter than of late. The VH ended 1 point weaker at -69 while the HK also lost 1 point to settle at +10. In London the front spread improved again to settle at -0.60. The ZH was also a tad weaker at -2.10. This meant the VV WP improved again to end at 91.50. Reasonable selling above 90.00 was noted. The HH WP finished virtually unchanged at 79.20. After the collapse the previous session it will have surprised few that further weakness was seen despite the macro improving slightly after the poor performance on Thursday. Sentiment has turned negative with funds covering longs as the physical market remain lethargic to say the least.
The COT as of 1st September showed the funds/specs had increased their net longs by just 1254 to 190,949. The non-commercials were much quieter than of late adding just 3,924 to increase their net long position to 140,471. Needless to say since the report date prices have dropped nearly 70 points with fund selling noted. Therefore, they are probably now closer to 100k net long. Their average buy prices is now above current levels suggesting they will be under pressure to liquidate more longs if prices weaken further. The commercials increased their net shorts by 1,399 to 454,508 with some limited producer selling. Since the report the producer selling has dried up while end-users interest is very much buying on a scale down basis. The Index funds were relatively active on both sides but ending by increasing net longs by just 145 lots to 263,560.
Labour day holiday in US today so just the London market open (closing at 17:00 London time). The market is firmer in early trading but, as to be expected, the volume is limited. The VZ is a tad firmer at -0.50 while the ZH is a little weaker at -2.30. It is unlikely market activity will pick up too much as traders await the NY opening tomorrow. It was a poor settlement technically on daily and weekly charts so further weakness looks likely although the macro will continue to have a big influence.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
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