The opening period was remarkably calm as the market edged along within an extremely tight range one low volumes. Friday evenings COT report had shown an increase in the fund long position to 179,279 lots and with a little more likely to have been added in the three days that have since passed it raises the question of how much more the specs will want to add at the present time if the macro fails to provide the necessary support. From late morning and moving into the early afternoon we managed to push beyond last week’s 13.57 high mark and slowly stretched up to 13.65 to bring last month’s 13.77 mark into sharp focus. Expectations that we would move to look at 13.77 proved totally unfounded however as prices saw a short and sharp correction back to opening lows which while not critical in itself seems to raise a host of concerns around the market. Further selling soon followed and having moved below Fridays 13.38 low mark to form a technical outside day we saw a host of spec long liquidation which sent the price hurtling towards 13c undoing all the efforts of the last week. It was only as we neared 13c that some reasonable buying was uncovered and we were able to find a toehold from which to try and stabilise though with the weaker specs now spun out and all technical momentum lost we struggled to bounce in any meaningful way. The fall had also taken its toll upon the March’21 spreads with March/May’21 back to 0.21 points with more extreme losses for March/Jul’21 into 0.47 points and March/Oct’21 some 15 points weaker at 0.56. The soon to expire Oct’20 contract meanwhile remained relatively firm, Oct/March holding above -0.50 points for most of the day and reaching -0.45 points as the March’21 weakened. Selling returned for the closing stages as the poor technical showing brought fresh shorts and some further liquidation to the fore and we ended weakly only a few points above the lows in a stark turnaround of recent activity.
Mar 21 – Sugar No.11
The market started the day in disappointing style, failing to gain any real traction to build upon last week’s gains in early trading and instead sliding a little lower in quiet conditions. Particularly disappointing were the white premiums which were immediately on the back foot and giving back $1 to $2 from Fridays closing values, not so much through selling but more due to a lack of any buying interest in the whites. Some interest did show for the Dec’20/March’21 spread as the morning progressed and the widening to $2.00 premium raised hopes that prices may again look to pull higher, however these hopes were dashed in spectacular style as we moved into the afternoon. Selling appeared to be led by the No.11 market which has seen a greater increase in spec buying over recent sessions (our COT showed a more modest weekly spec long increase to 20,607 lots) and despite a more favourable macro than we saw at the end of last week the start of the spec liquidation had a domino effect as the market hit something of a vacuum with very little meaningful buying on show as prices fell. In three waves we saw Dec’20 fall all the way back to 365.60 and it was only as we ran into the congestion from late August that we saw some moderate buying uncovered. This provided the opportunity for the market to stem the decline and halted the spec selling, though in a worrying sign for bulls there was no significant bounce taking place as we moved into the late afternoon. There looked to be some defensive buying for the white premiums during the closing stages which held values while No.11 was making fresh lows though whether a couple of dollars of artificial strength will mask the weakness of today’s performance seems highly unlikely.
Dec 20 – White Sugar No 5
ICE Futures U.S. Sugar No.11 Contract
ICE Europe White Sugar Futures Contract
