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Sugar Market Report for 18 October

Good morning,

The market slipped lower yesterday after threatening to break higher for much of the session. The market had opened 3 points lower before dropping further to hit the lows of the day mid-morning. However, it was not long before prices started to swiftly improve gaining over 20 points in the next 90 minutes. The market remained firm through most of the afternoon but, unable to penetrate higher started to drop back as the close approached. More long liquidation was triggered on the close with prices ending some 20 points off the highs. The HK saw a bout of profit taking as well which saw the spread narrow by 8 points to end at +89 while the KN was also 6 points weaker at +52. In London it was quiet again with the front spread ending weaker at +44.10 while the HK was a tad firmer at _10.80. This meant the WP recovered slightly with the ZH ending at 143.20 and the HH WP at 99.10. News from India that production will increase next season and their export policy will be released later this week probably put a cap on the gains but not enough to send prices significantly lower.

ISMA reported yesterday that they expect total Indian sugar production for the just started 2022/23 season to reach 36.5 million tonnes up 2% on last year’s record 35.8 million tonnes. Given their early under-estimation of last season’s production it could be argued that production may be higher with several analysts already pencilling in 37 million tonnes. Much can happen over the next few weeks as the crush gets into full swing. Over 35 mills in Maharashtra obtained permission to start crushing cane from the 15th October. Traders now await official details of the Government’s export policy for the season. Sudhanshu Pandey a senior civil servant at the Ministry of Consumer affairs, food and public distribution, said yesterday that the export quota will be announced within a week. It is thought that total exports of 9 million tonnes will be allowed with 5 million tonnes for the first tranche before things are assessed. However, mills will be keen to sign export contracts over the next few months before competition comes in from Thailand and, more, importantly, Brazil where production could get back to above 36 million tonnes.

This morning the market opened unchanged before dropping lower. Currently, prices are 5 points weaker. The HK is 2 points firmer at +91 while the KN is 1 point weaker at +51. In early London trading the ZH is a tad weaker at +43.90 while the HK is valued unchanged at +10.80. The macro is a mixed bag so far today with no particular trend. The USD Index is weaker while the BRL ended a tad better last night at 5.28. The market continues to threaten to break higher but, so far, has failed despite the structure remaining firm in both raws and whites. Whether an official announcement from the Indian Government will have a significant impact on prices is unlikely although much will depend on the amount allowed for the initial tranche. The funds have moved from net short to long but seem hesitant to increase their longs. Whether the market breaks above 19 cents will, possibly, depend on their appetite to buy. Conversely, the short term funds could liquidate if prices weaken further.

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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