Market Commentary

03/07/19: Sugar Market Morning Report

The market took a tumble yesterday dropping to its lowest level since the last day of May although it did manage to claw back 10 points by the close. The market had opened 3 points weaker but soon pulled back to unchanged. Values slowly improved to hit the day’s highs shortly before mid-day albeit only up 4 points on the day. However, as US traders got to their desks prices started to sag dropping 20 points in 15 mins as sell stops were triggered as the low of the previous session (and 50 day ma) were breached. Prices eased lower over the next hour to hit the day’s low mid-afternoon. Some light short covering was noted as the close approached which lifted prices off the lows and kept prices within the range seen over the past month. The VH ended just a couple of points lower at -92 while the HK was 1 point weaker at -10. In London the QV slipped back into the middle of its recent range ending at -6.00. The VZ was also weaker settling at -8.90. As suggested yesterday the main driver of direction yesterday was likely to be the macro and technical considerations as traders await to see whether the Indian monsoon improves and they continue to debate whether the huge and record delivery against N-19 was bullish or bearish. It would appear the jury is still out. In the event the macro impacted on prices as most commodities took a tumble yesterday taking sugar with them. Better weather forecast across US mid-West and concerns over global growth were the two factors cited for the weakness. The slid was compounded as technical levels were also broken with support only appearing once the lower BB was breached.

This morning the market opened unchanged and so far a miserable 3 point range has been seen so far in very limited volume. The VH is 1 point better at -91 while the HK is 1 point weaker at -11. In London the QV is virtually unchanged at -5.90 while the VZ is weaker at -9.30. This puts the VV WP weaker at 53.70 and the ZH WP also weaker at -42.80. Following yesterday’s rather unexpected drop the likelihood of any significant rally seems limited although with producer selling well above the market there prices could quickly rally 30 points without much resistance. On the other hand there would seem little reason for prices to drop further. While the short term funds were sellers yesterday any significant further fund selling would seem unlikely. End user pricing noted yesterday as prices sank below 12.30. To-morrow the US markets are closed for the Independence Day holiday (London is open but closes one hour earlier than normal) so perhaps market interest will be subdued. Technical support seen at 12.29 (lower BB) then 12.25 (yesterday’s low) then 12.04/02 (double bottom) then 11.83/2 (double bottom). Resistance seen at 12.47 (50 day ma) then 12.52 (10 day ma) then 12.67 (mid BB) then 12.82 (100 day ma).

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

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