Market Commentary

14/10/19: Sugar Market Morning Report

The market settled at the same level for the third consecutive session on Friday despite dropping to its lowest level since the 24th September in early afternoon trading. The market had opened 1 point weaker but slowly gained 8 points over the next three hours to reach the previous day’s high. In thin volume prices were unable to break higher forming a double top which triggered some light long liquidation by the day traders. Several sell-stops were triggered as the double bottom at 12.32/31 was breached but prices slowly recovered with prices getting back to within 2 points of the day’s highs mid-afternoon and eventually settling unchanged. The HK was quiet ending 1 point better at -10 while the KN was 1 point weaker at -14. In London the ZH saw limited action remaining around unchanged and eventually settling virtually unchanged at 2.10.

The HK was a tad firmer at -4.50. The market would have remained within the range of the previous 4 sessions if not for the triggering of a couple of stops when the recent low was breached. However, the recovery was swift and suggests little desire to sell afresh at the moment. However, producer selling seems to be waiting above 12.50 so unless the funds decide to cover a lot more of the shorts the up-side would also seem limited.

The COT as of the 8th October showed the funds/specs had increased their net short position by 23,340 to 170,538. This increase was not too much of a surprise given prices dropped 57 points during the reporting period. However, the size of the increase may have been more than some were anticipating.

Interestingly, the non-commercials saw a big cut in their gross long position. It would appear the fund managers decided to liquidate once prices stalled on the up-side. The commercials cut their net short position by 14,113 to 26,894 as end-destination priced while there appeared to be limited producer selling as prices dropped just over 60 points from the highs seen at the beginning of October. The Index funds increased their net long position by 9,228 to 197,434 as new position were established after start on new quarter.

This morning the market opened 3 points better before improving another 7 points to momentarily creep above 12.50. However, prices are currently just below this level but still in the plus column. The HK is unchanged at -10 while the KN is 1 point better at -13. In London the ZH is a tad weaker at 1.90 while the HK is unchanged at -4.50. This puts the ZH WP at 66.00 and the HH WP at 64.00. There would seem little reason to expect prices to move dramatically either way at the moment. The macro is mixed with crude lower but gains firmer. The BRL ended the week unchanged while the US dollar is unchanged but holding within the range of the past 6 weeks. Therefore, the market looks set to remain range-bound although a break out of the range on the up-side would seem more likely than a return to the September lows. Support seen at 12.22 (Friday’s low) then 11.94 (lower BB) then 11.92 (Recent low) then 11.74 (September and multi-month low). Resistance seen at 12.47 (mid BB) then 12.60 (10 day ma) then 12.86 (100 day ma) then 12.93 (recent high) then 12.98 (double top) then 12.99 (upper BB).

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

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