- The No.11 and No.5 barely moved last week.
- The specs appear tentatively bullish after a few weeks without clear sentiment.
- The strengthening Z/H spread ahead of the Z’21 expiry appears positive for physical demand.
New York No.11 (Raw Sugar)
- The No.11 traded horizontally again last week.
- The specs seemed bullish, but their buying was matched by consumer selling.
- Open interest across the 2022 contract is close to historic levels, which is a positive sign for physical demand.
- However, the spreads remain strong for 2022, which should discourage short-term buying.
No.5 London (White Sugar)
- The No.5 market also traded horizontally last week.
- The specs, however, took a bullish turn and sharply increased their net long position.
- The recent expiry saw a good delivery at a strong premium, which suggests physical demand is recovering after a few poor months.
White Premium (Arbitrage)
- The lack of movement in raw and white sugar prices means the white premiums have changed only modestly in the past week.
- The level remains lower than the margin needed by the refineries, especially considering how high freight rates have impacted their running costs.
- However, the recent weakening in bulk shipping costs has reduced the margin required.
- White premiums have also weakened, meaning the market is still well away from profitable levels.
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