Sugar #11 Mar ’22

The pullback seen yesterday encouraged some light consumer interest back to the market which helped prices to work a little higher across an otherwise slow morning. The start of the US day barely registered a flicker and so it was with some surprise that the market then kicked into life with spec buyers and day traders leading the push back up through 20c once more and bringing the 20.10 high from early this week into close proximity. Sentiment was being driven by a firmer macro while the USDBRL recovery to 5.40 is also making the market less attractive to producers who were already limited in their pricing. The one area of the macro struggling was the energy sector but it mattered not a jot to the longs who continued to support prices at the upper end of the range having run into some scale pricing above 20.10. It will be of concern that the March/May’22 spread remained stuck in the mid 20’s and did not back up the flat price strength as well as the long would have liked however with no significant profit taking to be seen the highs were maintained until the close where the Mar’22 level of 20.12 represented the most positive conclusion in more than a month.

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Sugar #5 Mar2

 Another calm start saw prices work a little higher though outright volume was virtually non-existent with only the Dec’21/March’22 attracting any interest during the early part of the session. Little changed during the rest of the morning and we seemed set a sideways day until some afternoon buying emerged to light up the board and push values sharply upward. Motivation for the rally was two-fold with specs pushing March’22 both in the No.11 and to a lesser extent here, while alongside there was gathering pace for the Dec’21/March’22 spread which shrugged off its recent decline as trade buying ahead of expiry set it sharply upward. Dec’21 open interest at 12,759 lots suggests we still have some liquidation to see ahead of next Monday however the sellers were content to stand back through the afternoon as the differential raced to a daily high at $9.90. Having traded to new recent highs in quick time the March’22 proved reluctant to retreat by very far and buoyed by a firmer macro held comfortably to be well positioned for an end of day push to new session highs. The spread meanwhile saw some late retreat from its highs with buyers having concluded their efforts, though still ended the day far more firmly than it had begun at $6.80. March’22 settlement at $516.00 is positive and provides scope to look toward $523.00 and then the contract high at $524.70.  

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Jon Whybrow

Jon joined CZ in 1991, working in the Treasury department before moving to join the derivatives team in 1994. Over 30 years Jon has built up significant experience across derivatives markets and products, particularly sugar, and is now Head of Flow derivatives providing market execution services for CZ’s global client base. He is responsible for the market commentaries which are published each day on CZ app.

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