Insight Focus
- Raw sugar speculators cut short position for the 3rd time in as many months.
- The nearby No.5 contract jumped above 575USD/mt by close of trading last week.
- Sugar white premium now sits above 170USD/mt, will this be sustainable?
New York No.11 (Raw Sugar)
- No.11 prices have spent another week moving between 18 and 18.5c/lb, closing at 18.2c/lb on Friday.
- With the Oct’22 expiry approaching, open interest in the contract has been in decline as positions close out or roll to the Mar’23 contract.
- As of the 30th of August, raw sugar consumers closed over 10k lots of long positions whilst producers added 8k lots as prices moved towards 18.5c/lb.
- In the same period the net spec position moved over 16k lots back towards neutrality as a significant volume of recently opened short positions were closed – this is the 3rd time a short position has been blown up in recent months.
- The No.11 forward curve remains inverted to Jul’23 moving into contango to Mar’24.
London No.5 (White Sugar)
- The No.5 spiked above 575USD/mt on Friday last week following a further week trading between 550 and 560USD/mt.
- With prices broadly moving sideways through much of August, by the 30th the net spec position remained at 31k lots, this is still close to the high of 2022.
- Friday’s sharp upward movement was mostly contained to the Oct’22 contract with the V/Z spread moving to 40USD, this leaves the forward curve heavily backwardated to the end of 2023.
White Premium (Arbitrage)
- The white premium has moved above 170USD/mt following Friday’s upwards movement in the No.5 – before this it had been stable around 150USD/mt.
- If this level can be sustained, we could start to see discretionary refiners increase their raw sugar demand and re-export refined sugar, traditional re-export refiners will also be maximising their throughput.
- Additionally the next H/H, K/K, and Q/N white premiums are all trading above 110USD/mt, these are unusually high this far in advance of their expiry.
For a more detailed view of the sugar futures and market data, please refer to the data appendix below.
No.11 (Raw Sugar) Appendix
No.5 (White Sugar) Appendix
White Premium Appendix
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