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Sugar Market Report for 17 October

Good morning,

Friday saw a quiet day but the gains of the week were maintained. The market had opened 3 points higher before improving further. The market then settled into a very narrow 6 point range for the rest of the morning. Prices dipped slightly as US traders got to their desks for the lows of the day to be posted but quickly recovered. However, interest was limited with just an 11 point range seen through to the close with the market settling slightly higher on the day but, probably more significantly, its highest settlement since 19th July. The HK maintained its very healthy premium at +97 while the HK was unchanged at +58. In London it was also quiet but, again, the spot moth premium was maintained with the ZH ending at +45.40 while the HK was at +11.70. The WP remained firmer with ZH finishing at 144.00 and the HH WP at 98.50. The market appears to be caught between bullish short-term fundamentals, negative macro and a production surplus that is likely to kick in next year. Producer selling noted at prices approach 19 cents while the funds have been slow buyers.

The COT as of the 11th October showed a dramatic turnaround of speculative positions during a period that prices improved nearly 90 points. The funds/specs saw them flip to a net long position of 46,423 as their bought a net 56,836. The non-commercials turned their net short position to a net long position of 13,022 as they cut gross shorts and added gross longs (+39,545). This increase is probably rather more than the market had been expecting but the question now is whether they have rediscovered their appetite for sugar. They have probably added more longs since the report and, currently, maybe around 20k lots net long. The commercials increased their net shorts by a large 70,162 to 240,831 as producer selling noted and trade long liquidation. The Index funds also increased their net longs by 13,327 to 194,408.


Czarnikow cut their Brazil CS sugar production estimate by 700k tonnes on Friday to 32.5 million tonnes due to adverse weather conditions. Heavy rains during the second half of September saw field operations severely disrupted. They also see decreased sugar levels in the cane due to the rain. They pointed out the production so far this season is some 2.8 million tonnes less than the same time last year and Czarnikow only expects last year’s total of 32 million to be surpassed in late November/ early December.


This morning the market opened 3 points weaker before slipping further. Currently, prices are 8 points weaker. The HK is 3 points weaker at +94 while the KN is 2 points weaker at +56. In early London trading, the ZH is firmer at +47.10 while the HK is unchanged at +11.70. This morning the macro is mixed with crude higher while softs and grains are mixed. The USD Index is weaker this morning while the BRL ended weak at 5.3260 on Friday. The market continues to be buffeted by differing factors. Short term the weather in Brazil is making the crush difficult but not impossible. The market still awaits official confirmation from the Indian government on their export policy for the current season. The weather in Brazil is good for the next cane crop and early indications are that next season production could get back to close to the record levels seen in 2020/21. Add an increase in production in India and Thailand and it would seem unlikely that the tightness seen currently will last further than the first quarter of next year. However, the market looks likely to remain relatively firm although failure to break above 19 cents may, eventually, trigger some liquidation which could see prices drop back. As is often the case the funds are likely to dictate direction. They have ample ammunition to add to their newly acquired longs but seem reluctant at the moment. If they decide to trim then prices will fall back.

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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