Sugar Market Report for 17 April

The market steadied Friday after slipping from 11 year highs earlier in the week. The London K-23 contract expired with a limited delivery of just under 250k tonnes. The market had opened 8 points weaker but recovered back to unchanged before a bout of selling took prices down to the lows of the day. However, as has been the case recently, good buying was soon found below and prices swiftly improved reaching the highs of the day as US traders got to their desks. However, prices soon dropped back to opening level before some late day-trader buying buoyed prices slightly. The KN slipped 1 point to end at +64 while the NV finished 4 points firmer at +34. In London, the spot month dropped on expiry as some longs adjusted positions. The KQ dropped over $9 to expire at +14.80 while the QV was a little firmer at +15.50. The KK WP went out at around 151.50 while the VV WP was virtually unchanged at 143.00. It was a quieter day than of late with most of the fund rolling completed and, probably, much of the end user pricing completed against the spot month which appears to have been the main driver of the rally from 21 cents to over 24 cents.

The COT report as of the 11th April was barely changed which will be a surprise to some after prices hit 11 year highs. The funds/specs increased their net long position by a modest 3,677 to 211,943 during a period when prices rallied nearly 200 points. The non-commercials increased their net longs by just 3,592 to 155,146 which is a surprise given the flat price rally and does suggest they do not have the appetite to add to their longs at these historic high levels possibly taking the view that the up-side potential from current levels is limited. The commercials saw a very small increase in their net short position increasing just 774 to 361,349 with a large increase in both gross longs and shorts which does suggest end-users being forced into pricing against producer pricing something that is not often seen. The Index funds cut their net long position by 2,902 to 149,407.

The London K-23 contract expired Friday with a modest 242,550 tonnes delivered with mixed destination from India, Dubai and Brazil. The quantity delivered will be debated as to whether bullish or bearish. In a supposedly tight physical market it appears some sellers were forced into delivering against the tape when unable to sell on physical market. Full details of delivery will be issued later today by the ICE exchange.

This morning the market opened 15 points firmer then immediately gaining 25 points before falling back. Currently, prices are 20 points firmer. The KN is 2 points weaker at +62 while the NV ended unchanged at +34. In early London trading the QV is $1 firmer at +16.50 while the VZ is firmer at +16.30. The market remains very firm and a return to the highs could be seen. However, as the funds seem reluctant to increase their net longs it will be a question of whether end-users have more pricing to be done against the spot month. K-23 option expiry today. Limited OI at nearby strikes so unlikely to be any fireworks with prices perhaps remaining around 24.25 – 24.50