Market Commentary

24/09/19: Sugar Market Morning Report

Prices improved yesterday ending 14 points higher after improving by just over 20 points at one point. The main reason appeared to be the unexpected large increase in the net short position held by the funds who increased their shorts to an-other record for the second week running. The market opened 3 points higher thereby forming a minimal chart gap. An-other 10 points were quickly gained as good market buying was seen. Having made this initial move higher the market then became oddly range-bound for the rest of the session seeing just a 12 point range for the vast majority of the day. The highs of the day were seen just after mid-day but there seemed little desire to push prices higher. There was limited evidence of any serious fund short covering which was the case the previous Monday when prices jumped over 50 points on the oil price shock. While the funds are happy to maintain their record short position the up-side looks limited in the short term. The VH lost ground in early trading dropping to -107 as the H-20 improved but some late buying saw prices improve to settle just 1 point lower at -99. The HK ended a couple of points firmer at -8. In London the ZH ended un-changed at -1.90 after improving nearly $9 since the beginning of September. The HK ended a tad firmer at -4.50. No one will have been surprised that prices improved on the back of the COT report that showed the non-commercials increased their net short position by just under 15k lots during the week to 17th September. However, prices stalled rather sooner than many had expected (hoped?) with the V-19 expiry acting as a short term brake.

With 5 trading sessions to go the OI in V-19 remains very high. As of COB Friday the OI in V-19 dropped just 2,899 to 118,016 lots. The current OI for V-19 is the highest ever with 6 sessions to go before expiry. Although much can happen before expiry currently the OI is 10k lots higher than in 2013 when 1.5 million tonnes were delivered (and Wilmar were the only receiver). Many traders expect to see a large quantity of Thai raws delivered as seen in N-19.

Unica will release their harvest data for the second half of August today at 15:00 (London time). The crush is expected to be slightly lower than the 1st half of August when the total crush was 42.5 million tonnes and the sugar production was 2.12 million tonnes. At the same time last season the total crush was 38.5 million tonnes resulting in 2.14 million tonnes of sugar being produced. The main difference between last season is the sugar/ethanol split which looks likely to remain around 35.90/64.10 as opposed to 37.2/62.80 last season. Unless the figures are vastly different they are unlikely to have any serious impact on prices.

This morning the market opened 2-4 points lower before swiftly improving into the plus column. Currently, prices are a couple of points firmer in thin flat price volume. The VH is 1 point better at -98 while the HK are unchanged at -8. In Lon-don the ZH is firmer at -1.70 while the HK is virtually unchanged at -4.40. This puts the ZH WP at 61.00 and the HH WP at 62.00. Prices look well supported at the moment with the huge fund short position and a production deficit predicted for next season. However, the uncertainty of the V-19 expiry which looks as if it could see a large delivery continues weigh on the market. Support seen at 12.10 (mid BB) then 12.06 (10 day ma) then 11.92 (last week’s low) then 11.74 (recent low and lower BB). Resistance seen at 12.45 (upper BB) then 12.48 (last week’s high) then 12.55 (double top) then 12.70/71 (double top).

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

Phone: +44 2077168598 | Email:

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