Sugar Market Report for 8 April
The NY market settled virtually unchanged yesterday after hitting their highest level this month earlier in the session. However, London’s structure continued to weaken with the front month spreads going to a discount. The market had opened a couple of points firmer but soon fell back into the negative column with the lows of the day being hit around mid-day. The market slowly started to improve with a bout of buying emerging as prices pushed through unchanged. Prices quickly rallied breaking above the highs of the previous session before finding some resistance at 15.30. Prices then dipped back to unchanged before making another attempt to push higher. However, the resistance held and this prompted day trader long liquidation which saw prices slip back to close around unchanged. The KN slipped back 4 points to settle at +9 while the NV dropped 6 points to finish at +2. In London the KQ came under immediate selling pressure from the opening swiftly falling to a discount. It remained weak throughout the session hitting -2.40 at one point before, eventually, settling at -1.40. With a week until the K-21 expiry shorts are rolling position which suggests demand is limited for whites and no one is keen to take delivery. The K-21 OI, as of Tuesday, was 22,141 lots with just over 10,700 lots traded yesterday so, currently, the delivery looks likely to be relatively small. The QV also weakened by $3 to end at +4.40. This meant the WP weakened again with the KK WP ending at 90.00 and the NQ WP at 93.40. Apart from the action in London’s front spread the market action was limited with much of the NY volume spread related as the funds crank-up their position rolling.
It was reported yesterday that unprecedented cold weather across France over the past few days may have caused huge damage to the newly planted sugar beet. The arrival of the cold weather coincided with the beet emerging from the soil. Growers group CGB estimate between 10k and 40k hectares of beet may have been destroyed. That could represent up to 10% of the 400k hectares planted this season which was already down 6% from the previous season due to low sugar prices and disease which was rampant last year after the banning of neonicotinoid pesticides. Farmers still have time to replant but this will depend on seed availability and costs. More information on the damage will emerge over the next few days.
This morning the market opened 1 points lower but soon improved to, currently, around 12-13 points firmer. The KN is 1 point better at +10 while the NV is 2 points firmer at +4. In early London trading the KQ is slightly firmer at -1.00 while the QV is unchanged at +4.40. The macro is mixed this morning with crude slightly lower while most other commodities trending higher with the USD index slightly lower. The market is beginning to find some support at around 15 cents and could improve further although the weakening of the structure especially in London is likely to limit the extent of any improvement. Fundamental are underpinning prices with concerns about EU production with weather issues and lower planted areas in several countries. There is also uncertainty over the Brazilian CS harvest which is underway. Countering this is concern over demand caused by increasing Covid cases in many regions across the world not least Brazil.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Kevin Watkins, Steven Trigg
Phone: +44(0) 20 7716 8598
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