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Sugar Market Report for 1 November

Good morning,

The market made a decent turnaround yesterday rallying just under 40 points whipping out the losses of the two previous sessions. The market had opened 12 points firmer before gaining another 14 points before it slipped back to opening levels. However, more short covering appeared which saw prices gradually improve over the remainder of the session to settle just below the highs of 18 cents. The main driver to the flat price strength was some good short covering after the market had dropped heavily from the highs of mid-October and the strengthening of the spot month premium. The HK gained 15 points to end at +108 while the KN also gained 14 points to settle at +60. The lack of clarity from the Indian Government over their export policy was probably the main reason for the nearby strength. It was a similar picture in London where the ZH surged by $5 to finish at +36.10 while the HK was up $$1.60 at +9.60. This meant the WP also improved with the ZH WP $3 higher at 131.00. However, the HH WP slipped to 95.00 mainly on the strength seen in NY. A correction was probably overdue after the market had dropped nearly 140 points in 10 sessions. The catalyst was the slightly ambiguous statement from the Indian Government that they would continue to curb exports through to the start of next season. Although traders still expect exports to be allowed the lack of information is beginning to concern traders.

All eyes remain on the two largest sugar producers. Brazil sees Lula Da Silva elected President after his narrow victory over Bolsonaro. The Brazilian markets were, obviously, pleased that the uncertainty is now over. Their main stock index rallied along with the BRL which ended over 2% better at 5.17 but volatility is likely to continue. It is unlikely to have too much impact on sugar in the short term. India’s delayed announcement of their export policy is now being viewed as bullish as the Government remains tight-lipped on policy. It is still expected that they will allow 5-6 million tonnes in the first tranche then another 3-4 million tonnes once an indication of sugar production for 2022/23. Every day we are told an announcement is imminent but Indian millers are aware they have a small window of opportunity to make sales before Thailand and Brazil close in.

This morning the market gapped higher opening 8 points firmer before immediately improving another 10 points as some light buy stops triggered as prices jump above 18 cents. The HK is 3 points firmer at +111 while the HK is 1 point better at +61. In early London trading, the ZH is slightly firmer at +37 while the HK is slightly weaker at +8.70. The macro is a positive picture this morning with all commodity markets higher. The USD Index has taken a tumble giving back all the gains of yesterday. The market looks as if it will improve further buoyed by positive macro and uncertainty regarding India. The strengthening spot month premium will be a deterrent to sell the flat price and there will be limited producer selling in the spot month. In the very short term, the chart gap between 17.97 and 18.05 is likely to be filled before long.

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.

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