Sugar Market Report

Good morning,

Friday saw another day of consolidation as the market continues its long wait for news from India regarding the government’s export policy. The market opened unchanged soon improving a tad to push into the plus column. Prices remained within a tight range for the morning either side of unchanged until US traders got to their desks when prices improved to the highs of the day. However, it was a rather half-hearted attempt and, eventually, a bout of light long liquidation appeared taking prices lower. A couple of light sell-stops were triggered at 14.70 which took prices down to the day’s lows but prices recovered fairly swiftly to settle 6-8 points lower on the day. The trading volume dropped back to its disappointing levels of earlier in the week failing to make 100k lots. The structure remains firm with the HK gaining another couple of points to settle at +73 while the KN finished 7 points firmer at +54. Slightly different story in London where the ZH continues to slip ending at -2.80 having been at a premium at the beginning of last week. The HK ended unchanged at +4.10. The ZH WP dropped over $2 to finish the week at 71.00 while the HH WP was also weaker at 73.90. With little change in the fundamental picture it was not too surprising the market was quiet and continued to consolidate below 15 cents. The fund activity was more limited – perhaps suggesting they have a large enough net long position for the time being.

The COT as of the 20th October showed the funds/specs had increased their net long position by 7,973 to 251,975. The non-commercials increased their net longs by 6,737 to 200,560. This net long equates to just under 20% of the total Open Interest and just over 44% of the H-20 OI where most of the fund position are likely to be held. The commercials increased their net short position by 13,660 to 519,826 as some meaningful producer pricing was noted for the first time for several weeks. There was also some end user pricing noted suggesting they are concerned about prices rising further if the Indian Government is less kind to the farmers than expected. They are also getting behind with their pricing and, perhaps, are not prepared to wait for a fund inspired sell-off as they have done, often successfully, in the past. The Index funds increased their net long position by 5,686 to 267,851.

Egypt’s ESIIC has issued a tender to buy 50k tonnes of raw sugar. Closing date for all offers is the 31st October.

The morning the market has dropped on the back of a negative macro picture. The market opened 6 points lower before swiftly falling another 24 points as long liquidation noted. Flat prices has nor slightly recovered to just below 14.50. The HK is weaker at +71 while the KN is down at +49. In London the ZH and HK are around unchanged at -2.80 and +4.00 respectively. This morning equities are lower across the globe. Crude has dropped just under 3% and the USD is firmer. Most commodities are trending lower which has dragged sugar lower. The continuing pandemic would appear to be the main reason with infection rates rising rapidly across the globe which mean more restrictions and more global economic gloom. Unless the macro develops into a more serious collapse then it would seem unlikely sugar will collapse. The uncertainly regarding India’s export policy should keep the market well supported. The only concern would be severe collapse in the macro which would enforce fund liquidation in sugar. Needless to say in these uncertain times this scenario cannot be discounted but would seem unlikely.


Contact the ADMISI Sugar Desk team:

Howard Jenkins, Charles Branch, Kevin Watkins, Steven Trigg

Phone: +44(0) 207 716 8598



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