Yesterday’s disappointing correction towards 13c undid a huge amount of recent effort from the specs to try and push higher, and this morning saw something of a hangover as prices struggled to recover very far which suggested that the fall had failed to spark much physical interest. Increasing the price range narrowed as the morning progressed, remaining in a tight band until the arrival of Americas based traders brought with it a short burst of selling that sent March’21 down through 13c to test moving average support, no doubt on the hunt for more sell stops. In the event the decline was remarkably brief with the lack of stops triggering some equally quick short covering to pull prices back upwards, but what followed was rather more surprising as specs and algo’s turned buyer and pushed values upwards through the same liquidity vacuum that we had fallen through yesterday to reach a session high of 13.53. This recovery placed No.11 near to the top of a weakening CRB as we made contrarian moves with the macro, particularly so as crude which is so often used as barometer was showing daily losses approaching 4% while a weaker USDBRL was improving returns for producers, likely increasing the overhead selling should we push back towards recent highs. The final couple of hours saw values ease back into the range as spec activity dipped although almost inevitably they returned with one final burst of buying to send us out on a positive note, though whether it is sufficient to lead us straight back to the recent highs most likely still rests in the hands of the macro.
Tomorrow sees the Oct’20 expiry and at present the expectation is that we could see a potential record tender with large quantities of Brazilian sugar anticipated in the tape. With two sessions remaining the open interest stands at 61,523 lots and todays volumes suggest only a modest reduction to that figure with it likely to still be showing in excess of 50,000 lots as we head into the final day
Mar 21 – Sugar No.11
A slightly higher opening proved to be short-lived and the market slipped to be negative once again, though was calmer than yesterday with values holding a fairly tight range. Little changed until mid-session when a brief spike lower pre-empted a reversal that sent values back on a positive path to recover a fair proportion of the ground that had been lost yesterday. Dec’20 initially recovered back beyond $370.00 and with a second wave of spec led buying following quickly behind made further inroads to reach beyond $375 before enjoying a period of consolidation. With the bulk of the buying confirmed to nearby prompts we saw spreads also regaining some of yesterday’s losses, though at the front of the board there was little change as Dec’20/March’21 held near to last night closing value of $0.70. White premium values were rather disappointing for much of the day and lagged a little with March’21 retreating back to $76 at one stage before attempting to find some support. The final hour saw prices pull back from the highs and while there was some defensive late buying from longs we ended with Dec’20 near to $372, a solid recovery though one which may lead to more activity within the weeks range as we move forward.
Dec 20 – White Sugar No 5
ICE Futures U.S. Sugar No.11 Contract
ICE Europe White Sugar Futures Contract
