Weekly Sugar Wrap

Written by Howard Jenkins, Head of Global Commodities, ADM Investor Services International Limited

sugar market weekly wrap

The week has seen prices continue to improve hitting their highest level for eight months yesterday. Last time prices were at current levels back in February the market was starting its Covid triggered collapse which saw prices shed over five cents over the next two months. Since the end of April prices have slowly but surely improved on a mixture of improving fundamentals and investment money flowing into agri-commodities as the funds take a more risk-off attitude having decided that food is probably a better bet than most other asset classes. Nevertheless, commercial traders remain very wary of the global uncertainty being caused by the pandemic and remain very cautious trading on a need to do basis.

The main driver for the recent six-week rally from under 12 cents to the current, just shy of, 15 cent level is the continuing silence from the Indian government regarding the export subsidy policy for the current season. It was suggested yesterday that due to up-coming elections in India no official decision is likely to be forthcoming until mid-November. Chatter from Indian traders is that the recent improvement in world prices may see the Government lessen the size of the subsidy. The Government are likely to be aware that while, for the past two seasons India exports have had to compete with ample supplies from other producers, this season India exports are needed to make up for a drop in production elsewhere and, predominantly, Thailand.

A month ago traders were talking prices higher on the back of the dry weather across Brazil’s CS – since then there has been a marked change in the weather. Soaking rains have been received across most cane states and there is more to come over the next 10 days. While this will impact on the current harvest with the ATR dropping it bodes well for next season’s cane crop. However, it would seem Indian subsidies trumps Brazilian rains at the moment.

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.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, 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 may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2024 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.