Sugar Market Report for 24 Feb

Good morning,

The market saw a sizable correction yesterday after hitting 4 year highs the previous session. However, the spot month premium improved again as the longs continue to squeeze the shorts who cannot deliver. The market had opened a couple of points lower but soon improved with new highs of the move being seen. However, the buying was thinner than the previous day with only marginal gains achieved. By mid-morning prices started ease lower with prices gradually dropping throughout the rest of the session as more profit taking and some tentative trade selling was noted. The market settled just off the lows although K-21 finished above 17 cents. The HK gained 6 points to settle at +140 while the KN gave back the gains of the previous day to settle down 10 points at +67. In London the structure weakened with the KQ down at +18.60 and the QV at +15.00. This meant the WP eased slightly with the KK WP at 103.40 and the NQ at 99.60. The panic buying seen on Monday was limited yesterday as the market calmed but traders remain nervous. The lack of producer selling continuing to impact while concerns over availability of nearby sugar is keeping the market firm. However, Indian exporters are busy selling sugar both whites and raws taking advantage of the fact that prices are currently represent excellent margins for them.

There is limited fresh fundamental news around at the moment as all eyes remain on the NY spot month. The OI dropped 27,230 lots to 70,256 lots as of COB Monday – virtually the same level at the same time last year in front of the H-20 expiry when 984k tonnes were delivered. Yesterday saw a volume of just shy of 49k lots traded in H-21 suggesting currently OI is around 50k lots.

This morning the market opened 1 point lower before swiftly losing another 15 points on some light market on opening selling into a thin market. Since then prices have recovered and are currently around 5 points firmer basis K-21. The HK is 7-8 points weaker at +131 and the KN is unchanged at +67. In early London trading the KQ is unchanged at around +18.60 while the QV is slightly weaker at +14.50. The macro is mixed this morning with crude slightly lower and grains slightly higher. The USD is slightly weaker and the BRL ended last night unchanged at 5.45. As we get into the last three sessions before H-21 expiry the receivers and delivers setting positions. It is likely to remain volatile as other positions are rolled or closed. Overall, it would seem unlikely prices will collapse from current levels and may well improve with most still seeing any weakness as a buying opportunity.

Contact the ADMISI Sugar Desk team:

Howard Jenkins, Kevin Watkins, Steven Trigg

Phone: +44(0) 20 7716 8598

Email: admisi.sugar@admisi.com

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