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Sugar Market Report for 19 October

Good morning,

The market slipped lower again yesterday but ended well off the day’s lows despite a weak crude market. The market had opened unchanged but dropped 13 points within the first 10 minutes of the session. Some support was initially found around the lows of the previous session but by mid-day prices were under pressure again slowly dropping further to hit the lows of the day mid-afternoon. Good scale-down buying from 18.50 was enough to trigger some light short covering which saw prices swiftly improve 20 points. The short covering eventually faded with prices slipping again by the close before late day-trader short covering appeared. The trading volume was poor as many remained side-lined. The HK finished unchanged at +89 while the KN slipped 3 points to +49. In London, the spot month saw a hefty drop as longs lightened their positions. The ZH slipped $7.70 to finish at +36.40 suggesting supply is slowly catching up with demand. The HK was a tad weaker at +10.60. This meant the WP also dropped with the ZH WP weakening by $7.50 to 135.70 while the HH WP ended virtually unchanged at 99.20. The market continued to correct lower after hitting a two-month high last week after failing to break above 19.00 cents. Chatter about increasing Indian production for the coming season and the imminent publication of their export policy plans also weighted on the market as has the macro which remains under pressure with crude dropping over 3% yesterday on fears of higher US output combined with the global threat of recession and lower Chinese demand.

The weather across Brazil’s CS remains mixed with rain over the coming days before drier weather moved in next week which will allow crushing to continue. In India, the monsoon is slowly petering out. The country’s total monsoon rainfall from June until September was 6% above normal while, so far, in October rainfall has been 88% more than normal which has delayed the start of the season but bodes well for the cane crop overall and total production. Currently, exports are seen being capped at 9 million tonnes with total production at 36.5 million tonnes. If it is more then the export cap is likely to be raised.

This morning the market opened 6 points firmer, but at the last post-close last night before slipping. Currently, prices at 1-2 points firmer in quiet trading. The HK and KN are unchanged at +89 and +49 respectively. In early London trading the ZH is a little firmer at +36.80 while the HK is around unchanged at +10.60. This morning the macro is mixed with crude recovering slightly after the falls of yesterday while other commodities are, generally, slightly lower as the US Index improves. The BRL ended firmer last night at 5.242. The market appears undecided on direction at the moment but looks more prone to slip lower assuming the macro does not improve significantly. Support is likely to be found at 18.50 and below while resistance seen at 18.95 and above. Traders will be watching the spot month in London as to whether it weakens further against the rest of the board. If the ZH does continue to narrow then it may have a knock-on impact on raws as well. Physical demand for raws from Indonesia and China plus the concerns over what impact the rain is having on the CS crush will add support.

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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