Written Commentary
Good morning,
Yesterday saw another range bound day although prices did end at their highest level for five sessions. The market had opened unchanged before dipping to the lows of the day but, again, support was enough to stop any further decline and triggered some short covering and fresh speculative buying which saw prices quickly improve and gaining 37 points by the time US traders were at their desk to post highs of the day. The market soon headed lower as the day traders turned sellers with prices swiftly dropping 25 points. However, the market soon started to improve again back to the highs before slipping slightly on the close. The HK ended unchanged at +126 while the KN was a couple of points firmer at +66. In London, the structure weakened with the HK ending at +12.30 its lowest close since the 12th December. The KQ ended $1 lower at +17.30. This meant the WP also weakened with the HH WP ending at 109.40 and the KK ending at 124.90. It was another consolidation day although news that Brazil’s Petrobras has raised their gasoline prices was, probably, the main reason prices rallied slightly.
As mentioned above Petrobras announced yesterday they would raise refinery gate gasoline prices by 7.5% starting today. Diesel prices will remain unchanged. This is the first price rise since June 2022. Thursday will see a board meeting which will see a vote on the nomination of Senator Jean Paul Prates as the next CEO. If nominated, as expected, it is likely to signal a shift in fuel policy which is likely to be supportive to ethanol and could shift mills view on their sugar/ethanol split. However, analysts calculate around 75% of the 2023/24 sugar exports has already been priced.
The Thai harvest continues apace with ideal weather. As of the 22nd January, a total of 40.2 million tonnes of cane has been cut with total sugar production reaching 4.3 million tonnes which is an increase of 8.64% year on year. Analysts are pencilling a total production of around 12.3 million tonnes which would represent an increase of around 18% over last season’s total of 10.10 million tonnes.
UK sugar production for 2022/23 is now likely to only reach 740,000 tonnes due to adverse weather. This represents a drop of 28% compared with the 1.03 million tonnes produced last season. British Sugar reported that this drop represents lower beet sugar yields due to adverse weather. The very cold weather during December damaged sugar beet still in the ground.
This morning the market opened 5 points higher but that turned out to be the high so far with prices quickly dropping away. Currently, prices are 13 points lower. The HK is 2 points lower at +124 while the KN is 1 point lower at +65. In London, the HK continues to weaken and is currently at +10.50 and the KQ is also a tad weaker at +17.20. The market continues to look as if it is stuck within a range of 20 cents to 19.50 cents and it is tough to decide which way it might breakout at the moment. In the short term it seems unlikely to move too far.
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.
