Another quiet morning saw the market holding a narrow range once again, March’23 sitting between 19.59 and 19.71 for the first few hours on low volumes. Yesterday’s efforts illustrated the continuing desire from funds/specs to defend their long holding regardless of the current lack of bullish fundamental news, and once the US based specs had reached their desks, so the market renewed the higher path, kicking up into the lower 19.90’s to sit just beneath the short-term 19.94 double top. This level has been the target over recent weeks and so when it was breached some increased buying began to gather from the funds to maximise the opportunity. A variety of scale selling from producers was filled in as the price accelerated above 20.00 on aggressive fund buying (a few buy stops included), and though the price pulled back from 20.27 once the initial burst of fund buying eased it was a temporary break with more soon to follow. The second aggressive wave of buying sent the price to 20.41, just 7 points shy of the 20.48 contract high, a remarkable performance given the lack of macro support and illustrating how sugar has broken away to follow its own technicals at present. The later stages saw a mix of defensive buying and profit taking lead prices to chop around just shy of the highs, with settlement price established at 20.29 to leave the market well placed for a challenge of 20.48 as specs look to seize the advantage ahead of the year-end.
Yesterday’s move back up through the range encouraged a little more support back into the market with the positive efforts continuing this morning as March’23 edged up through the lower $540’s. Volumes were still limited with only very light activity seen for the spreads and premiums, and it seemed that we were simply setting a base for the busier afternoon period in hope that specs could drive the price action ahead. The start of the Americas day brought no change to the pattern and so price action continued quietly, March’23 pushing toward $545.00 though the market environment remained calm. The situation changed dramatically midway through the afternoon as we reacted to a spike in No.11 values, following suit with a push to $551.00 on thin volume before pausing to take stock of the situation. While crude values were nudging back above $80 there was little macro influence behind the move with sugar more detached in recent weeks that was previously the case, and instead our own technical factors took over as another aggressive push took March’23 into new ground with a break of Novembers $552.80 high. There was no discernible increase in the selling volume as the price pushed up to $556.40 late in the afternoon, with the day ending a small way shy of this mark at $554.80 to leave the technical picture in good shape.
