Sugar #11 May’22

No.11 found a steady stream of early buying which took May’22 up into the 17.90’s during the first hour, but despite another strong macro showing the rally stalled here with selling above 18c tempering the gains and leaving prices still struggling to break from the confines of the narrow February range. This led to consolidation which lasted into the early afternoon, and while it felt like another bout of slow trading the move actually served to provide a platform to push up beyond 18c. through the early afternoon the gains were slow and steady, though with the wider commodity sector (grains and energy) showing heavy gains in reaction to Ukraine (crude was up 10%) so sugar could not resist a modicum of macro pull no matter how detached we have been in recent times. Specs stepped in more aggressively as last weeks highs came into view to run buy stops in the 18.30’s and reach 18.43 before the inevitable long liquidation followed, however a difference to any recent activity was that instead of this marking another failure we instead saw fresh support then follow in to bring prices back towards the highs during the final hour. A mixed closing period ensured that the day ended shy of the highs with May’22 settling at 18.34, though importantly given the recent lack of impetus this was just above last months 18.33 mark and so may provide some fresh technical impetus.  

A total of 26,383 lots (1,340,322t) was tendered against the March’22, with the Mar/May’22 spread having expired at 0.30 points premium. Details are as below.

undefined

Sugar #5 May’22

Initial calm trading soon led to a push higher with May’22 working back up above $500 as some light buying emerged in reaction to the firmer macro picture. Things then calmed to leave prices consolidating ahead of $500 throughout the rest of the morning, though white premium values remained very firm despite the lack of outright movement with May/May’22 trading up to $107.50. Though sugar has been largely detached from the macro for some time the gains being seen for the energy and grains sectors are making other commodities appear rather cheap and so it was that further light buying emerged during the afternoon to lift the market up by a few more dollars, aided by a distinct lack of pricing to the short side. The pattern was now well set and with May/Aug’22 also finding buying to trade a couple of dollars higher at $14.70 so the move extended on to a high at $509.70 entering the final hour. The buying remained steady through to the close, bringing premium values back up a little after they had given back several dollars over the afternoon, and registering another new high at $510.00 on route to a closing value of $509.30. This represents the highest May’22 closing value so far this year with the recent $511.00 high in sight, a break of which has the potential to generate further buying and target $525. 

undefined

undefined

undefined

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.

More from this author