Sugar #11 Mar’22

A very mixed start to the week saw March’22 initially reject the higher call however buying through the first hour then galvanised the situation and pulled the price up to 20.12, a gain on 19 points on overnight value. Having lost the upward momentum on Friday we struggled to find continuing interest to buy and this allowed values to fall back into the 19.90’s where a period of consolidation ensued ahead of the US morning. During the early afternoon the market started to creak again and some light sell stops were triggered which took the price swiftly down to 19.71. Alongside this there was also the drag factor of the Oct’21/March’22 spread as it slipped to -1.02 points as we edge towards Thursdays expiry, the modest open interest figure of 49,024 lots with 4 days remaining meaning that the environment is becoming increasingly thin. There was some brief respite from the lows as buying crept in ahead of the Unica figures for 1st half September, however these were near to expectations showing a crush of 38.38m tonnes, with 2.548m tonnes of sugar produced and a sugar split at 44.94% and soon we slipped back to hold near to the lows once again. A quiet couple of hours was only broken by some late selling which saw March’22 down to a new low mark of 19.66 on the close. The settlement at 19.68 has a negative leaning with the monthly low at 19.31 now moving into view, and while recent moves have simply been due to spec and day trader activity we now find ourselves in a position where any macro downturn could potentially trigger further liquidation and correction.

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Sugar #5 Dec’21

It was a very muted opening which saw Dec’21 climb a few dollars upward on limited buying, however despite the positive appearance of the board the lack of substance soon led prices to slide back towards $505 and wipe out most of the green from the board. A choppy few hours then followed which saw the price climb as far as $508.20 before slipping all the way back down towards $503.00, with the many gaps on the intra-day chart serving to emphasise the very thin trading seen throughout the period. Moving through the afternoon there was little sign that things would settle down, though with no fresh news to provide influence all movement was within the confines of the days range leading most traders to remain stood aside. Spreads were calmer than the flat price though Dec’22/March’22 did strengthen to -$3.40 to provide a sign the market would not melt down despite sitting only just ahead of the lows as we reached the final hour. Some late selling saw us trade down to new lows on the close/post-close, leaving Dec’21 to settle at $502.40 which places it right in the centre of the September range.

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ICE Futures U.S. Sugar No.11 Contract

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ICE Europe Whites Sugar Futures Contract

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Jon Whybrow

Jon joined CZ in 1991, working in the Treasury department before moving to join the derivatives team in 1994. Over 30 years Jon has built up significant experience across derivatives markets and products, particularly sugar, and is now Head of Flow derivatives providing market execution services for CZ’s global client base. He is responsible for the market commentaries which are published each day on CZ app.

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