There was early buying for the market today, possibly encouraged by plenty of macro “green” and the positive nature of yesterday’s move away from the yearly lows, the first hour seeing Oct’22 trade as high as 17.89. This was still below yesterday’s 17.97 mark and with the upward momentum fading we saw specs retreat to leave prices quietly drifting in the 17.70’s on low volumes. Again, today saw sugar show no desire to track alongside the macro with the early afternoon seeing smaller specs on the sell side once more to send Oct’22 back down to 17.55 before stabilising. Volumes were far lower than yesterday, both for outright activity and spreads, to be expected given that an inside day was being played out though of disappointment to many who would have been hoping to build upon the recovery. All remained calm until the final 30 minutes when some renewed selling / long liquidation sent prices down to new daily lows at 17.52, leading to a disappointing settlement level at 17.54 which takes the shine off yesterday’s performance and suggests we may continue within the lower end of the range for the time being unless todays COT reveals a more significant net short than anticipated. 

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Oct’22 spiked to $536.70 on the opening but there was to be no continuation of the monstrous gains recorded yesterday as selling kicked in and sent the price quickly back to the upper $520’s. The situation then calmed with the flat price settling down to hold a narrow band either side of $530.00, still a resilient showing from the spot month as it maintained the Oct/Oct’22 white premium value in the upper 130’s and keep hold of most of the gains. Specs have undeniably been the main players in these recent movements and the morning stagnation led to some long liquidation from shorter-term traders that sent Oct’22 back to a session low $525.50. Despite a reluctance to sell the Oct’22 back downward the pull of No.11 weakness and a lack of any sizable buying prevented prices from recovering all the net losses before ultimately ending the day weaker against some MOC selling (likely pre-weekend position squaring). Oct’22 settled lower at $527.20 to conclude the month, though spec longs will likely remain pleased overall with the performance over the past two sessions and look to move further from the lows in the coming days. 

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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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