Market Commentary

22/06/20: Sugar Market Morning Report

Good morning,

Friday saw another day of gains in sugar aided by better macro. However, the volume was particularly poor with limited interest from all quarters. The market had opened a couple of points firmer before settling into its usual morning slumbers remaining within a narrow 9 point range until early afternoon when prices started to improve. Prices continued to improve hitting the day’s high mid-afternoon before slipping back to opening levels after failing to break above the previous day’s highs on some day trader liquidation. Some late buying buoyed values slightly with prices settling within the narrow range seen over the past couple of weeks. The NV improved a couple of points to settle at -13 while the VH ended 1 point weaker at -53. In London the weakening of the spreads and WP continued apace as concerns over demand had seen longs liquidating. The QV dropped another $2 to finish at +8.50 while the VZ was also $2 weaker at +3.80. This put the QN WP at 102.60 and the VV WP at 91.30. New York continues to be caught within a narrow trading range holding above 12 cents. Whether it can maintain these levels or even improve does depend on the macro which remains uncertain.

The COT as of the 16th June showed the funds/specs increased their net long position by 16,098 to 47,118. The non-commercials increased their net longs by 13,081 to 22,628 as the gross shorts continue to cover. There was a small increase in the gross longs but it was hardly convincing as the larger funds continue to remain side-lined. The commercials increased their net shorts by 22,193 to 276,990 as trade covered longs and some shorts suggesting limited confidence the market is going to move too much from current levels. The Index funds increased their net longs by 6,095 to 229,872.

This morning the market opened 4 points lower before some market on opening buying saw prices improve 10 points. However, once this buying dried up prices slipped back to their opening levels where they currently remain. The NV and VH are both 1 point weaker at -14 and -54 respectively. In London the structure continues to weaken. The QV is $1.20 weaker at +7.30 as is the VZ at +2.60. However, it is very limited volume so far. It does seem the front spread is likely to slip further. There seems little reason for prices to move out of the recent range for the time being unless the macro moves dramatically. This morning the macro is mixed with crude unchanged, equities firmer and most agri-commodities slightly weaker. The BRL ended Friday slightly better at 5.31 but still looks vulnerable to further weakness. As of the 18th June the OI in N-20 remained relatively high at 86,369 lots. With only 26k lots traded Friday it is likely to drop in the OI will be limited. There are seven trading sessions left until expiry. At the moment it is difficult to estimate the delivery but seems likely to be large again.

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598


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