Sugar #11 Oct’21

Today’s less-hawkish-than-expected comments from Jerome Powell at the end of the Jackson Hole symposium set the stage for happy markets worldwide. Commodities edged higher, with sugar being no exception, and currencies worldwide appreciated against the dollar. The NY#11 market started quiet and unchanged relatively to yesterday’s settlement, however soon after 6am BRT we started seeing a steady buying pressure which quickly led the first prompt to 19.90. After 9am volume came in and by 10am we saw a large market order drive prices all the way down to 19.75 again, but this was quickly reversed as marketwide optimism kept pushing things up. We pierced through the 20.00 easily, which puts us with eyes in the 20.30 level. The spec buying on the earlier prompts and lack of selling pressure from producers led to a rise, albeit modest, on the curve spreads: 2022 spreads edged 0.02 to 0.03 upward. During the next 2 weeks we’ll start seeing the funds roll, which might bring volatility to the market and a weakening of the spreads, which provides the background for the physical traders to decide on delivery/receipt of sugar from the tape.

On the whites side we’re now on the final 2 weeks til expiry. The VV premium had expressive gains, partly due to the large spike on the #5 VZ spread seen today, and this suggests a receiver on the LDN#5 might have appeared. H and K arbs also showed slight recovery, trailing expectations of better demand next year.

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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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