Market Commentary

08/07/19: Sugar Market Morning Report

Friday saw prices end lower on the day and the week after prices failed to make a decisive technical break higher. The market had opened 3 points firmer after the Independence Day holiday before attempting to push higher in limited volume. The day’s high was reached within 15 mins of the opening but it was a fleeting attempt to break above the mid BB with prices soon settling back into a narrow 7 point range until prices dipped around mid-day. Values did improve again to test the day’s highs shortly after but that failed again and this time around a bout of long liquidation saw prices drop just over 30 points to hit the day’s lows late afternoon where they remained through to the close. So, although the day’s low was higher than the two previous sessions, the market closed at its lowest weekly close since the last week of May. The VH lost 6 points on Friday to end at -94 while the HK was 1 point better at -10. In London the QV was $1 better at -6.50 while the VZ was a tad firmer as well at -8.10. The market continued to be dominated by macro considerations with the drop on Friday mainly down to the overall weakness seen in agri-commodities although total volume was limited as many US traders took a long weekend after the 4th July celebrations.. However, the recent weakness of the White Premium also emphasis the impact the huge available stocks of Indian white sugar is having on prices. The VV WP dropped to below 51.00 early Friday its lowest level for over 3 months although it did improve slight by the end of the day.

There is little fresh fundamental news around at the moment. The Indian monsoon is probably the key issue at the moment. A delayed start to the monsoon sees rainfall down some 28% from the 50 year average for the first month. While there is plenty of time for the rainfall totals to build it is now unlikely that the long term average will be reached by the end of September. In Brazil the vast majority of the crush is going to ethanol production and with prices still well below 13 cents it is unlikely this will change for the time being. Cold weather over the week-end has had coffee traders excited and may see some stories of damage to cane to emerge over the next few days.

This morning the market opened 2 points firmer before swiftly improving another 8 points on some early market buying. This is probably a consequence of an improving macro picture. The VH is 1 point better at -93 while the HK is unchanged at -10. In London the QV is $1 firmer again at -5.50 while the VZ is unchanged at -8.10. The front spread is still caught well within the range seen over the past fortnight. With 6 trading sessions to go before the Q-19 expiry the OI of just over 40k lots is still relatively high but plenty of time to drop especially as it would seem the potential receivers may be cautious of what they might receive. This puts the VV WP a little better at 52.00 and the ZH WP still below 40.00. The market looks likely to remain range bound for the time being. With continuing concerns over the Indian monsoon the downside looks limited but with heavy selling likely to be found over 13 cents the up-side looks equally limited. Technical support seen at 12.26 (lower BB) then 12.25 (recent low) then 12.04/02 (double bottom) then 11.83/2 (double bottom). Resistance seen at 12.50 (10 day ma) then 12.64 (mid BB) then 12.80 (100 day ma) then 12.93/4/5 (triple top) then 13.02 (upper BB) then 13.08 (double top).

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44 2077168598 | Email:

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