Market Commentary

27/06/19: Sugar Market Morning Comment

Prices dropped 25 points yesterday as the prospects of a large delivery against N-19 weighed on the market. The market had opened a couple of points higher before slowly declining during the morning to the support at 13.50. Values improved around mid-day hitting the day’s highs but prices were unable to breach the highs of the previous session and the mid-BB thereby forming a double top at 13.65/66. This inability to move higher triggered a bout of day trader liquidation which brought prices some 20 points off the highs. There was a half-hearted attempt to push higher again after the release of the Unica data for the first half of June. However, this was coupled with the release of the OI showing that it had only declined marginally in N-19 and still stood at nearly 4.5 million tonnes. The view that N-19 will see a large delivery won the argument and prices dropped further mid-afternoon dropping to their lowest level since 3rd June and the lowest settlement since 30th May. The NV dropped 8 points at one point before ending 5 down at -29. The VH was 1 point weaker at -92. In London the QV ended a tad weaker at -6.20 while the VZ was a little firmer at -8.70. All eyes on the N-19 at the moment with expiry on Friday. Total traded volume in N-19 yesterday nearly 62k lots so one would expect the OI to drop to around 70-75k lots. The general view is that a large delivery suggests ample supplies and sluggish demand. However, at least one trade house appears to disagree.

Unica released their crush data for the first half of June yesterday. It showed that the crush for two week period was 42.37 million tonnes producing 1.865 million tonnes of sugar. The split was 35.85/64.16 slightly higher than in the second half of May. Cumulative total sugar production is now 6.7 million tonnes still some 10.4% lower than at the same time last harvest. It is difficult to see how this drop will be made up lat-er in the season suggesting that total sugar production by the end of the season may struggle to top 25 mil-lion tonnes.

This morning the market opened 3 points better before pushing higher as some market buying appeared in the N-19 flat price which swiftly improved by another 8 points. Buying of the NV also saw it quickly improved 5 points to -24. Once the initial flurry of activity was exhausted the market has calmed. The VH is 2 points better at -90. In London the QV is a little firmer at -5.90 as is the VZ at -8.40. This puts both the VV WP and ZH WP firmer at 53.00 and 41.60 respectively. The N-19 and the NV will be the centre of attention again today although the majority of traders will be square of the front month. Whether the movement of sugar from one or two large trade houses will have any long term impact on sugar prices is open to debate but it will be interesting to see how it all pans out. Perhaps the actual delivery will not be as high as the cur-rent anticipated. Technical support seen at 12.30 (lower BB) then 12.29 (yesterday’s low) then 12.04/02 (double bottom) then 11.83/82 (double bottom). Resistance seen at 12.63 (10 day ma) then 12.65/66 (double top and mid BB) then 12.85 (100 day ma) then 12.93/4/5 (triple top).

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

ADM Investor Services International Limited is authorised and regulated by The Financial Conduct Authority Member of The London Stock Exchange. Registered office: 4th Floor Millennium Bridge House, 2 Lambeth Hill, London EC4V 3TT. Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Ex-change can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities. These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere.