Market Commentary

26/07/19: Sugar Market Daily Report

Yesterday saw an inside day as the market failed to build on the gains of the previous two sessions. How-ever, scale down buying from 12.00 cents stopped any large sell-off. The market had opened 6 points higher before settling into a 10 point range for the next 4 hours as traders awaited to see whether US fund manager would cover further shorts. In the event a rather half-hearted attempt to push higher was seen early afternoon but prices failed to break convincing above the mid-BB which triggered a bout of day-trader liquidation which took prices down to the lows of the day shortly before the close. Values did improve slightly by the close but still settled in the negative column. The volume was considerably lower than the previous two sessions as traders took time out to assess things. The VH was 1 point weaker at -98 while the HK was unchanged at -12. In London the VZ was a tad lower at -10.50 as was the ZH at -11.20. The market appears to be caught between the present and future. Large global stocks especially in India and Thailand continue to weigh on the market despite growing chatter about possible production cuts due to weather issues. However, as seasoned traders are well aware, taking trading decision based on possible problems caused by weather is notoriously difficult.

As reported earlier in the week the Indian monsoon continues to see a rainfall deficit. The country, so far, has received 17% less rain than average since 1st June. However, the Indian Meteorological Department has forecast above average rainfall over the next two week which will also be well distributed across the whole country. In fact the weather department is confident enough to report that the rain deficit is likely to come down to single digit by the end of August. The heatwave across Western Europe will break in the next 24 hours with widespread thunderstorms expected across France and Germany which may help to de-stress the beet crops.

This morning the market opened 2-3 points higher before slipping momentarily into the negative column. However, prices quickly recovered and, currently, are 4 points better. However, the volume, so far, is minimal. The VH is 1 point weaker at -99 while the HK is unchanged at -12. In London the VZ is a little firmer at -10.30 as is the ZH at -11.00. This puts the VV WP unchanged at 55.80 and the ZH WP slightly weaker at 44.70. More consolidation is likely today. Traders are likely to want to see how the monsoon develops over the next few days. Prices are now firmly back in the range seen back in May and unless the funs cover more shorts are likely to stay there for the time being. Technical support seen at 11.86 (10 day ma) then 11.49 (lower BB) then 11.39 (recent low) then 11.36 (May low). Resistance seen at 12.15 (mid BB) then 12.23 (Wednesday’s high) then 12.35 (20 day ma) then 12.60 (100 day ma).

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

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