Sugar #11 May’22

There was immediate selling this morning as May’22 was pushed down to 19.01, and though it recovered almost as quickly to 19.25 the tone was set, and trading settled to remain within this early range for a few hours. The macro picture was also far less volatile this morning (except for Nickel) and following several days of high activity the calm was being welcomed by many. The feeling remains that the geopolitical picture will be volatile for some time to come however with our own fundamentals remaining bearish so this presents a conundrum of sorts as to just how much further the macro picture and spec action will push the market without a fundamental shift to encourage the trade to also join the long side. This didn’t seem to matter as we moved into the afternoon with buying again emerging as crude values drove the macro upward once more. May’22 climbed to 19.73 with increasing pace before topping out short of yesterdays highs, and while the commodity board was generally green it felt as though the softs were still lagging with relative gains well short of those seen for energy. Specs moved back out of some of the longs during the final hour to leave settlement to the centre of the range at 19.43 while the May/Jul’22 ended a tick lower at 0.12. This still raises questions as to the longer-term sustainability of the higher levels and despite the wide range seen today it feels fair to call it a day of consolidation.

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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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