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Sugar Market Report for 29 September

Good morning,

The market ended the day slightly higher as the spot V-22 remains at a healthy premium. The market had opened 1 point firmer before immediately dropping 11 points. The market continued to fall hitting the day’s low mid-morning and its lowest level in a week. However, once this selling dried up prices started to improve and were back to unchanged as US traders got to their desks. The market continued to improve as crude improved hitting the day’s high by mid-afternoon. However, the previous day’s highs were not reached the 5th session that the high has been lower. The market eventually closed better on the day but still range-bound. The VH continued to remain firm gaining 6 points during the morning but falling back during the afternoon and ending 2 points weaker at +58. The OI saw a large drop to 32,901 lots with another 27,662 lots traded yesterday. Despite the limited OI it does look as if the delivery maybe larger than previously expected. Chatter is Brazil will be the main origin given the strong spot month premium. Cost of carry is also increasing while demand maybe waning. The HK improved by 6 points to end at +72 its strongest since July suggesting there is still concerns that physical tightness may continue until 2nd quarter next year especially if CS production does not reach current expectations. In London it was quiet again with the ZH and HK virtually unchanged at +35.00 and +10.20 respectively. However, the WP slipped lower with ZH at 137.00 and the HH WP at 102.10. It was not a particularly inspiring session although the recovery in prices suggests support is still in place scale down from 17.50 and the strengthening of the HK indicates the market may not slip too much more in the short term.

China has announced that the Government has set its 2023 sugar import quota at 1.945 million tonnes unchanged from this year. This sugar will benefit from lower import tariff with 70% going to state-owned companies.

This morning the market opened 2 points lower before slipping a little more. Currently, prices are 5 points lower. The VH is 1 point firmer at +59 while the HK is unchanged at +72. In early London trading the ZH and HK are around unchanged at +35.00 and +10.20 respectively. The macro this morning is generally negative with crude lower while grains/soya are around unchanged. The USD Index is firmer although this is after a large drop back yesterday after hitting over 20 year highs. The BRL ended around unchanged at 5.36. The V-22 looks likely to hold much of its premium through to expiry as the longs have now positioned themselves to take delivery knowing that any attempt to liquidate is likely to see the spread collapse. Uncertainty over the latter part of the CS harvest is likely to keep the HK premium strong for the time being but with a likely global surplus and uncertain demand next season the up-side looks decidedly limited unless an unexpected weather issue occurs.

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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