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The market plunged nearly 40 points yesterday as the Coronavirus continued to impact on the financial markets across the world. The market had opened 3 points weaker (and at what turned out to be the high of the day) but immediately dropped lower as a wave of selling took prices down another 14 points over the next 30 minutes. The market continued to lose ground as more long liquidation appeared with the market bottoming out early afternoon. Values did improve a little on some light day trader short covering but dropped again on the close to register the lows of the day as more long liquidation noted. The market settled some 56 points off the multi-year highs seen a couple of weeks earlier. The HK improved 7 points to settle at +54 as position rolling continued in front of Friday’s expiry. The OI is falling steadily and was down 16,673 lots at 70,196 as of Friday. Another 31k lots traded in H-20 yesterday which should ensure the OI is currently around 55k lots. The KN dropped 7 points ending at +13 probably on the weakness of the flat price. In London the KQ slipped a little to end at +8.10 while the QV was also weaker at +6.60. Yesterday’s action was all about the macro with global stock markets sharply lower and gold and US dollar higher as the Coronavirus took hold in Italy, South Korea and several Middle East countries. Fears are now that a global pandemic will occur and this will have significant impact on global growth. However, concerns about a growing production deficit for the current season continues to underpin the market ensuring the sell-off was contained.
India has reallocated more than 600k tonnes of unused export quota the government has announced. The quota has been shared among the mills who were top exporters. Many sugar mills, especially from Maharashtra, have failed to meet export quotas following poor weather hit cane production.
As of the end of last week the Thai harvest remain on course to be considerably lower than last year’s record production. The Cane crush is running some 20.5% lower than the same time last year at 72.19 million tonnes. Raw sugar production is running some 23% behind last year total at 5.88 million tonnes while white sugar production is 8.75% lower at 1.8 million tonnes. In a research note Finch Solutions said they see total Thai sugar production some 27% lower at 9.8 million tonnes this season. They went on to say they see sugar production taking several years to recover as farmers replant cane lost due to drought.
Contact the ADMISI Sugar Desk team:
Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg
Phone: +44(0) 207 716 8598
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.
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ADMISI is a wholly owned subsidiary of Archer Daniels Midland (UK) Limited and indirectly is a wholly owned subsidiary of the Archer Daniels Midland Company (ADM).
ADM Investor Services International Limited is authorised and regulated by the Financial Conduct Authority and a member of the London Stock Exchange.