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Sugar Market Report for 11 October

Good morning,

Yesterday saw the market push up to fresh near 3 month highs in the spot month before retreating to close slightly lower on the day. The market had opened unchanged but soon slipped into the negative column and remained there until US traders got to their desks when prices swiftly improved to hit the highs of the day. However, the buying soon dried up and prices slowly dropped back to close in the bottom half of the day’s range. The trading volume slowed with many traders appearing to be quieter as they await more information on Indian exports and the state of Brazil’s CS crop. The HK ended firm but unchanged at +88 while the KN slipped 3 points to +50. In London, the spot month improved against the rest of the board again with the ZH up$1.50 at +44.90 while the HK was a tad lower at +11.00. This meant the WP also improved with the ZH at 145.10 and the HK at 100.20. The continuing contango of the market is due to several factors. A lack of clarity of the Indian Government’s export policy for the current season is one. The view is that the Government may make an announcement sometime this week and certainly by the end of the month. However, some Indian mills are likely to take advantage of higher prices knowing that it is given there will be exports allowed and probably, at least, 5 million tonnes in the first tranche. The continuing uncertainty of the total amount of sugar that may be produced by the mills across Brazil’s CS is another issue. Rain has, undoubtedly, caused delays. It is a little drier in the short term but more rain is on the way later in the week. However, the rains are making things look particularly good for next season which starts in less than six months. Already analysts are talking 36-37 million tonnes of sugar. If India produces a similar quantity then raw sugar supply is very unlikely to be an issue for much of next year especially if Thailand increase production to over 11 million tonnes. White sugar remains tight and may continue longer. Poor EU production and rising refining/processing costs will continue to have a big impact.

Unica will release their harvest data for the second half of September today at 15:00 (London time). This time last year saw a crush of 35.8 million tonnes producing 2.3 million tonnes of sugar from a 43.70/56.30 split. The recent rains will continue to have an impact on the progress of the harvest but analysts and traders will be looking for production to continue to increase against last year’s cumulative totals.

The French agricultural minister announced yesterday that strategic fuel reserves will be released to allow sugar producers to continue processing and stop any likelihood of factory stoppages. Recent strikes at oil refineries have seen over a third of fuel stations running short of diesel and petrol. Sugar factories rely on farmers having enough fuel to harvest their beet and transport it to a factory to be processed.

This morning the market opened 2 points lower before slipping further. Currently, prices are 9 points weaker. The HK is 1 point lower at +87 while the KN is unchanged at +50. In early London trading, the ZH and HK are both a tad firmer at +45.00 and +11.20 respectively. The macro is slightly negative this morning with crude down. Grains/soya are mixed while the USD Index is unchanged while the BRL ended slightly stronger yesterday at 5.19. The market looks likely to remain firm but may slide further from the highs but, unless, the structure sees a material weakening the flat prices would seem unlikely to collapse. Unica could have an impact if the data shows a slowing in production compared with last season. However, Indian selling likely if prices approach 19 cents.

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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