Sugar Market Report for 15 March

The market remained within the recent range yesterday albeit at the lows of the day. The market had opened 6 points firmer before swiftly dropping 11 points where support was initially found. This prompted some light short covering which saw prices improve to just above 21.00 cents. However, as US traders got to their desks the market started to fall back and although another small improvement was seen later in the afternoon prices dropped to the lows of the day on the close. There is now a double bottom at 20.65/66 which may trigger further selling if the market breaks lower. The KN ended unchanged at +51 while the NV gained 3 points to finish at +24. In London, the structure improved slightly with the KQ ending nearly $1 firmer at +12.70 as did the QV at +13.80. This meant the WP also improved with the KK WP at 125.40 and the VV WP at 115.40. It was a quieter session than of late as the volatility of the wider macro picture impacted. While things did improve with equities markets seeing a decent bounce off the lows things still remain uncertain least of all the thinking on US interest rates. On Monday most thought any further increases looked unlikely but by yesterday a resumption of further increases is expected. This uncertainty has meant traders seem reluctant to do anything other than trade the range although prices still remain very firm.

The CFTC released another delayed COT report last night. This was for the week up to the 28th February. It showed the funds/specs cut their net longs by 14,777 to 183,048. The non-commercials cut their net longs by 10,127 to 143,149 which was probably not expected as prices rose over 50 points at one point during the week although this was mainly as a consequence of the H-23 expiry which rallied to contract highs before expiry and pulled the rest of the board higher. The commercials cut their net shorts by 12,641 to 375,168 as trade cut shorts. The Index funds increased their net longs by 2,155 to 192,120. It would seem the next delayed COT up to the 7th March will be released before the end of the week which may mean the reports are up to date by Friday when the positions for yesterday will be known.

This morning the market opened 4 points lower but immediately dropped another 13 points as the double bottom at 20.65/66 was breached which triggered some additional selling. Currently, the market is 8 points lower. The KN and NV are both 1 point lower at +50 and +23 respectively. In early London trading, the KQ and QV are both a tad lower at +12.50 and +13.50 respectively. The macro is mixed this morning with equity indexes unchanged, metals lower while grains/soya are higher. The USD Index is also slightly firmer while the BRL was unchanged last night at 5.25. The breakout below the recent range now makes the market look, technically, slightly vulnerable to further losses. However, the macro will continue to influence the market and the underlying positive fundamental picture has not changed and will be supportive. End-user pricing is poor so much will depend on where they decide to start to price.