Sugar #11 Mar’22

An uninspiring start to the week saw March’22 quickly slip back from unchanged levels to be back in the 19.60’s, and while not critical in any way it was a sufficient decline to trigger some spec long liquidation as sell stops beneath 19.65 spiked the market downward on around 4,000 lots. This placed us right into the support area which has held through September and October and we edged through it to reach 19.41, the lowest level seem for March’22 since trading at 19.31 on 13th September. A mixture of consumer pricing and spec buy backs enabled the market to stabilise back above 19.50 but though there was a brief push back above 19.60 early in the US day it gathered no momentum and we returned to type by drifting along within the range once more. Having failed to progress beyond the mid 19.60’s on a couple of occasions we drifted back beneath 19.50 moving into the final hour, confidence not being helped by a further weakening of the March’22 spreads which saw March/May’22 printing as low as 0.25 points. All was calm until the final 15 minutes which saw pressure exerted upon March’22 to test the aforementioned 19.31 support level. The call saw a mixture of volume from both sides establish settlement at 19.35 however the post close was very different with almost 8,000 lots traded for the spot month as sell stops were triggered down to 19.14 before buying poured in to pull the price back to 19.30. While this was not reflected in settlement it undermines the technical picture, and though likely to encourage consumer/end user interest overnight the specs will not sleep comfortably with any weakness potentially triggering further liquidation and potentially new near term short positions.     

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Sugar #5 Dec21

The week got underway with selling emerging as a result of already lower No.11 values, and with very little scale buying around to provide support we soon slipped down to $514, an early sign that we may well see the recent “see-saw” trading continue. While the pace of decline slowed there remained a downward bias during the morning, culminating in a low at $509.80 while more that $10 beneath Friday’s settlement was still well above the $507.00 low mark of last Thursday. Values then attempted to consolidate and take some heart from a broadly supportive macro environment however today this seemed to be having no bearing upon sugar and for several hours the flat price struggled to climb beyond the low teens. The most encouraging recent factor for bulls has been the strength of the Dec’21 spreads however today this momentum was being lost (though more due to a lack of buying than any significant selling) and in a low volume environment Dec’21/March’22 returned to the $5.00 area. During the latter part of the afternoon the price edged back down towards morning lows, with the closing stages then seeing another flush of spec long send the Dec’21 down to $505.70, while March flushed through to $498.30 as the spread widened again to $7.00 late on. This still leaves us within the broad range however such a weak performance may well bring support either side of $500 back into view.   

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ICE Futures U.S. Sugar No.11 Contract

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ICE Europe Whites Sugar Futures Contract

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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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