Market Commentary

17/01/20: Sugar Market Morning Report

The market settled lower for the first time in five sessions yesterday. A new high for the move was seen in early trading but for the rest of the session prices remained within the range of the previous day. The market had opened 1 point lower before slipping another 4 points. However, prices soon recovered with good speculative buying noted. 20 minutes later a new high was hit (albeit by just one point). Although several attempts were made to push higher the buying was thinner than of late and the selling was boosted by more appearing overnight. By mid-day the market’s inability to move higher triggered a bout of speculative long liquidation with prices swiftly dropping 25 points. Sensing an opportunity more buying appeared which enabled all the losses to be covered with prices back at the highs an hour before settlement. However, another bout of long liquidation took prices off the highs with the market settling some 8 points lower on the day. The HK ended 1 point better at +5 while the KN was also one point firmer at +4. In London the HK improved again ending $4 higher at +4.40 as more short covering noted encouraged by some trade house buying. The KQ was also a little higher ending at +2.20. Yesterday’s action will have surprised few traders. The market was technically over-bought so some attempt at consolidation was needed and seen. There was also a good volume of fresh selling (possibly Thai) that appeared over-night which also put a tighter cap on the up-side of the market. Chatter about Brazilian millers gearing up to sell as ethanol parity loomed into view and the possibility that Indian sugar production will improve back to over 30 million tonnes in 2020/21 also seemed to sober up some of the more rally intoxicated traders.

This morning the market opened 3 points better but immediately dropped and is currently some 5-6 points lower. The HK is 2 points weaker at +3 while the KN is unchanged at +4. In London the HK is weaker at +3.30 while the KQ is a little firmer at +2.70. This puts the HH WP is a couple of dollars firmer at 79.20 while the KK WP is also firmer at 77.00. Further consolidation is probably the order of the day. A long US weekend approaches with NY closed on Monday for Martin Luther King Day (London will close an hour earlier than normal) and the COT will be eagerly awaited to confirm that the non-commercials have been heavy buyers. However, the market remains positive with traders still seeing any dips as a buying opportunity so it is unlikely prices will collapse. Nevertheless, some sharp moves can be expected as volatility increases (albeit from comatosed levels). Therefore, while it would seem unlikely new highs will be hit today a drop below 14 cents would also seem improbable. The BRL remains weak ending at 4.185 last night and crude remains some $7 off its highs of late December. Technical support seem at 14.04 (10 day ma) then 13.79 (previous resistance) then 13.73 (mid BB) then 13.41/40 (double bottom). Resistance seen at 14.55 (upper BB) then 14.57/58 (double top former yesterday) then 14.63 (Feb high) the 15.37 (Jan 2018 high).

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598


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