Insight Focus
- Raw sugar futures have been strong in recent weeks.
- Speculators remain heavily long the market.
- They may not have the firepower to lift it higher without open interest increasing.
New York No.11 Raw Sugar Futures
Raw sugar futures remain close to 12-year highs at around 28c/lb.
Speculators continue to hold a large net long position in sugar, just below 200k lots. Further speculative buying in the week leading up to the 7th November was met with producer hedging, holding raw sugar at the top of its recent range.
The speculative long accounts for around 27% of open interest. It’s been at this level since September. This is towards the high end of the sustainable range and suggest that speculators could struggle to push the market out of its 2023 sideways price range unless open interest increases dramatically, perhaps through increased producer hedging to absorb the speculative buying.
This is exactly the kind of market action we’ve seen in the week leading up to November 7th; we will need to be alert in case this process continues as we move into year-end.
Consumers have no reason to rush their hedging, especially with the entire futures curve heavily backwardated.
No.11 Open Interest
London No.5 Refined Sugar Futures
The refined sugar futures continue to lead the charge. In contrast to the raw sugar futures, the refined market has been in an uptrend.
Speculators remain heavily long the refined sugar futures.
The refined sugar futures curve remains heavily backwardated.
White Premium (Arbitrage)
The 2024 white premiums remain strong. We’ve not seen this kind of strength in the H/H white premium at this stage in the cycle in at least 5 years.
For a more detailed view of the sugar futures and market data, please refer to the appendix below.
No.11 (Raw Sugar) Appendix
No.5 (White Sugar) Appendix
White Premium Appendix
