Sugar 11 Mar’22

Returning from the extended holiday weekend the market was being indicated higher on the back of strong gains made by white sugar yesterday, a position that was bolstered by strength in the soft and energy sectors and our own COT which showed the funds/specs having reduced the net long considerably to just 50,858 lots. In the event we gapped up on the call as expected and quickly printed to 18.55, placing values immediately above the 18.46/18.52 former lows which had provided resistance late last week. Following a brief pause the market looked to continue upwards and with only limited scale selling in place the March’22 contract extend its gains to 18.70 by mid-morning before consolidating ahead of the start of trading in the Americas. A further boost came with spec led buying pushing up to 18.77, however with some slightly heavier scale interest emerging things calmed and prices once again headed sideways. Today was the final day of trading for the Feb’22 options and as the afternoon progressed it increasingly seemed that prices would not divert too far away from the 18.75 strike, until the final hour drew out some profit taking from longs. Still there was a push back above 18.70 as we headed towards the call however with further profit taking/position squaring being seen settlement was established away from any strike at 18.66, concluding a positive technical performance.

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Sugar #5 Mar’22

A marginally higher opening soon gave way to losses with selling emerging which pushed March’22 back to $506.50 and in so doing narrowed the white premium values a touch from Friday’s closing values. Elsewhere in the commodity world some decent strength was being seen for No.11 in reaction to our own gains yesterday as well as the energy sector, and it was not long before the upside resumed with a sharp rally away from these lows to reach another new recent high at $512.20. Prices then eased back into the range and the day developed into one of choppy consolidation with prices swinging around the range though spending a larger proportion of the time at the upper end. Spreads were relatively calm as March/May’22 maintained modest gains above $10, only seeing fairly light volume despite some heavier than usual flat price activity. Prices slipped back away from the highs during the final hour, and this triggered some late long liquidation to send prices all the way back to the bottom of the daily range on the post close. Settlement was still above this at $509.10 which maintains the positive shape of the market overall.

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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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