Sugar #11 Mar ’22
Resuming after the Thanksgiving holiday we found a wildly different situation to that of Wednesday with news of a potentially dangerous new strain of Covid-19 shaking markets all across the macro with red showing across both equities and commodities. This led March’22 to gap lower with an opening print at 19.70 and though there was some initial buying that allowed prices to hold it w=did not last for long and soon we edged down further to 19.50. Consolidation set in with consumers content to price at the lower end of the recent range holding prices throughout the rest of the morning, though at no stage did we see any sign of a bounce as specs held away from the market. Moving into the afternoon there was initially little change to the picture however with losses mounting on both equities and other key soft and energy products we began to slide, seeing specs both clean out longs and add fresh shorts as we reached 19.15 despite seeing no sell stops along the way. Having held at 19.15 for almost an hour and with selling easing up we experienced a sharp bounce back into the 19.30’s against short covering to finally provide some respite from the brutal battering that had been taken. This proved to be the last activity of significance with the closing stages then playing out away from the lows to leave March’22 valued at 19.35 heading into the weekend. Contrary to the lower flat price we saw the March/May’22 spread closing at 0.41 points premium, a sold performance which will provide some encouragement to bulls that the fall can be arrested. Near term it is likely to be the macro which continues to dominate and should concerns over the latest Covid variant grow with increased restrictions or new lockdowns there may be more weakness to follow to follow with technical eyes focussed upon the October low at 18.82.
Sugar #5 Mar ’22
Lower No.11 values led us to gap down this morning and with the macro showing mostly red as uncertainty sweeps markets following news of a potential new covid-19 variant there seemed little hope for a quick recovery. The early stages saw a graduated decline before a few sell stops beneath $506 triggered a small spike lower, however with consumers showing as keen scale buyers down the board things soon came back under control and we settled into a range for several hours. With many in the US enjoying a 4-day weekend we waited with interest for the reaction during the afternoon and when the time came what we found was a continuation of the selling, sending prices gradually lower to rest in front of the $498.00 area which represents the early November lows. A push through this area to hunt out further sell stops achieved little other than to extend us to a new monthly low at $495.80 and was quickly followed by short covering that shot the price back above $500 on just a few hundred lots. Through the flat price movement today we saw some remarkably calm spreads with the board moving quite uniformly. At the front of the board the March’22 spreads were in fact standing up positively with March/May’22 working up to a daily high at $2.60 and remaining firm as we moved towards the close. White premiums meanwhile chopped around as the flat price movement varied between us and the No.11, March/March’22 trading beneath $72 and above $76 over the course of the day. There was more position squaring taking place as we headed in towards the close, maintain the price above $500 with March’22 eventually settling at $501.40. Covid developments and the macro now seem likely to control the short term moves and should the news not improve we could see further short-term weakness taking us away from the wider fundamental view.
