Market Commentary

06/04/20: Sugar Market Morning Report

Good morning,

Friday saw a quieter day in sugar with prices eventually ending virtually unchanged on the day. The market had opened just a couple of points firmer but soon gained over 30 points as a bout of sold speculative buying met with limited scale up selling. After this initial buying was completed values did slip a little but most of the gains were retained. However, during the afternoon prices started to ease on the back of a weaker BRL quote and lower crude prices. Prices did momentarily slip into the negative column but some late speculative short covering enabled prices to end the day with marginally gains. The KN ended the day 1 point better at -2 while the NV ended 2 points firmer at -20. In London the KQ took a tumble dropping nearly $4 to end at +13.70 as traders eased out of some of their long positions. The QV also eased to end weaker at +5.50. This put the KK WP at 109.00 and the QN at 95.00. Some would argue that sugar did well to remain in the plus column Friday after the BRL took another tumble losing another 1.75% against the US dollar ending at 5.3490. Concerns about President Bolsonaro’s attitude towards the Coronavirus and how the country plans to control the spread was one reason for the weakness.

The COT report for the 31st March showed that the investment fraternity are still very much in a risk-off mood. The funds/specs increased their net short position by 2,629 to 4,795. The non-commercials did increase their net shorts by 8,034 to 17,929 but volumes was limited. The commercials cut their net short position by 5,651 to 218,838 as end users continued to price while some fresh trade selling also noted. The Index funds cut their net long position by 3,024 to 223,634.

This shortened week (NY and London closed Good Friday while London also remains closed on Easter Monday) will continue to see sugar prices influenced by the macro. The OPEC meeting scheduled for today has been postponed until Thursday according to an OPEC source. The meeting is to discuss supply cuts and an end to the price war principal between Saudi Arabia and Russia. President Trump suggested in a tweet last week that some dramatic cuts were to be made but, as yet, there has been no confirmation this will happen. Crude prices are, therefore, likely to remain very volatile until some firm news about OPEC’s efforts to restore some balance to the oil market are seen.

This morning the market opened 15 points firmer on the back of firmer equity markets before slipping a little to be currently around 10 points firmer. There appears to be a glimmer of optimism that Coronavirus cases are beginning to level out in Italy, Spain and New York. However, these markets are likely to remain very nervous and volatile. The counter to the better equity markets is weak crude and BRL. The KN is 1 point better at -1 while the NV is unchanged at -20. In London the KQ continues to weaken currently $1.50 weaker at +12.30 while the QV is a tad firmer at +5.70. The market is likely to continue to be influenced nearly entirely by the macro. Nevertheless, it does appear the market may be trying to tentatively try to find a bottom to the market. Since hitting the low of 10.02 last week there appears the selling maybe becoming more limited which may, in time, trigger some short covering if the macro allows.  

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598

Email: admisi.sugar@admisi.com

Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities. These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere.