Whether it was the feint aroma of positivity surrounding the macro this morning or simply some selling fatigue, the market experienced a rare recent moment by trading higher during the morning, admittedly modest gains being maintained as Oct’22 help quietly in the mid 18.30’s / lower 18.40’s. Trading was quiet throughout this period and that changed little as the US came online, some light volatility on a print to 18.50 the only obvious change. A little more buying then emerged ahead of the publication of UNICA numbers for the first half of June, and it seemed as though there may have been some advanced warning when the figures appeared showing cane production of 38.598mmt / Sugar production at 2.142mmt / Mix at 44.44% / ATR 131.04 kg/t. This was a lower cane figure than had been widely anticipated and though the mix remained in line with estimates provided another low sugar number. Despite this the rally topped out soon after publication and the market returned to sideways trading within the range, albeit toward the upper end with the board remaining positive on the day. The macro also maintained some gains (though not all) which raises the question of what sugar requires if it is to mount a meaningful recovery as at the present time there seems to be no spec interest in pushing the market back up and the trade are content to hold back and continue picking away scale down particularly now that Jul’22 requirements are covered and there is no immediate time pressure. This led us calmly toward the close where buying ensured a positive conclusion for Oct’22 at 18.53, arresting the recent decline though with plenty to do if this is not to simply represent a short-term correction.

· Jul’22 continues towards an expected small tender with Open Interest now reduced to 30,399 lots. Jul/Oct’22 continued at a small premium throughout the majority of the session to end at 0.03 points premium, though some aggressive post close selling saw it trade as low as -0.04 points during the final minutes.

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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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