Written Commentary
Good morning,
The market dropped back yesterday reaching its lowest level since 19th July at one point forming a double bottom at 23.71/70 before prices recovered slightly. The market had opened 1 point higher before improving in a similar pattern as the previous session with prices soon falling back to opening levels where some light support was found. However, the negative macro began to weigh on the market with a couple of sell stops triggered as 24.20 was breached. This encouraged further selling which saw prices drop another 50 points before some support was found. Once it became apparent that the selling was limited day-trader short covering was seen which soon encouraged some fresh buying which took prices some 40 points off the lows before falling back slightly as the close approached. The VH improved 2 points to end at -17 while the HK finished 4 points lower at +130. London remained firm compared with NY with the structure remaining firm. The VZ did slip a touch to end at +13 while the ZH improved to +14.40. However, it was the WP which improved yet again. The VV WP was up again to 169.50 while the VZ was also considerable firmer at 156.50. This is the highest level seen since the spike in September 2022 and will be encouraging all refineries to take full advantage of these exalted levels. Despite the drop in NY the market continues to look well supported with prices trying to consolidate around 24 cents. The low trading volume (95.6k lots yesterday) is exacerbating the volatility.
Limited fundamental news around at the moment. News from Russia is that their beet crop is looking good. Their 4th beet test of the season shows root weight at 370g compared with 328g last year. The sugar content is up at 13.6% compared with 12.86% in 2022. Mexican production looks likely to increase for next season. Early estimates see sugar production at between 5.8 to 6 million tonnes compared to 5.2 million tonnes this season.
This morning the market opened 5 points higher. However, prices soon reversed and the market is, currently, 16 points lower. The VH is unchanged at -17 while the HK is 1 point weaker at +129. In early London trading the VZ is weaker at +12.10 as is the ZH which last at +13.90. The macro is mixed this morning with crude slightly higher, softs lower and grains higher. The USD Index is unchanged while the BRL ended weaker last night at 4.91 after their Government cut interest rates by more than expected on Wednesday. The market is trying to find a level of support. The double bottom formed yesterday at 23.71/70 is the next downside target. However, its breaching may not trigger any significant selling. The funds have probably covered a lot of their reinstated longs recently so are unlikely to unleash heavy selling. Additionally, the strength of London and the WP will also act as support. Nevertheless, the limited volume seen at the moment will be continuing to cause volatility.
Contact the ADMISI Sugar Desk team:
Phone: +44(0) 20 7716 8598
Email: admisi.sugar@admisi.com
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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.
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