Market Commentary

10/06/19: Sugar Market Morning Comment

To say Friday’s action was dull would be an understatement. A miserly ten point range was seen as prices failed to be able to break conclusively through the resistance at and above 12.50. However,  while the chance of a bigger break higher is still on the cards no one is in a hurry to sell afresh. The market opened 2 points weaker before slipping to the day’s low an hour later. Prices pushed back up to 12.50 but the selling in place was enough to stop any further gains until the last 45 minutes when prices did push through the level. However, the buying was fairly limited and the highs of Wednesday held again thereby forming a triple top at 12.52/53. The NV dropped back again to its Wednesday level despite the strength in the flat prices ending down 7 at -28. The VH ended a couple of points better at -85. In London the QV dropped back to end at -6.50 while the VZ was virtually unchanged at -8.70. It is difficult to say anything interesting about Friday’s performance apart from the fact that it was the highest weekly settlement since mid-April. However, this should be countered by the fact the close was virtually bang in the middle of the 214 point range seen since early November which, sadly, sums up the state of the sugar market at the moment.

The COT report as of the 4th June showed that the funds/specs cut their net short position by 25,063 to 158,899. This cut was probably a little less than might have been expected given prices improved 70 points during the reporting  period.  The  non-commercials  cut  their  net  shorts  by  just  under  18k  lots  which  suggests  just  the  short term funds were active. Nevertheless, since last Tuesday prices have remained firm suggesting good further fund short covering. It is likely the funds/specs are currently around 120k lots net short. The commercials saw their net short  position  increase  by  22,835  to  43,016.  This  means  the  producer  remain  poorly priced  although  over  the past 3 sessions there has been further  pricing noted as  prices  push above 12.50. The Index funds cut their net long position by 2,227 to 201,915.

This morning the market opened 1 point weaker before slipping another 7 points on some early speculative selling. However, the low of Friday appears to be support now, and prices are now in the middle of the range seen on Friday. The NV is unchanged at  -28 while the VH is 1 point weaker at  -86. In London the QV is a tad weaker again at -6.70 while the VZ is down at -9.30. This puts the QN WP weaker at 62.00 and the VV WP at unchanged at 62.40. Today is probably make or break for the market. Either prices make a decisive break higher or they are likely to drop back towards 12 cents. The former would seem more likely given the triple top is only 7-8 points above the current market. The macro is likely to be the catalyst to what direction prices take. Currently, agricultural contracts are lower while crude is higher. The BRL ended slightly weaker but still up on the week. However, there is very good scale up producer selling in the spot month which needs to be done, realistically, within the next 10 sessions. Technical support seen at 11.42 (double bottom and Friday’s low) then 12.17 (10 day ma) then 12.09/08 (double  bottom) then 11.95 (mid BB).  Resistance  seen at  12.52/53 (triple top) then 12.58 (upper  BB) then 12.60 (100 day ma) then 
12.75/76 (double top) then 13.05 (April high).

Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44 2077168598 | Email: admisi.sugar@admisi.com

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