The sugar futures markets have recovered after prices came under pressure due to Omicron concerns.
The specs have significantly reduced their position in raw sugar.
Despite the large recent price movement, the spreads in raws and whites are largely unchanged.

New York No.11 (Raw Sugar)

The No.11 weakened well below 19 c/lb after Omicron caused speculators to close positions.
Since, however, there’s been a strong price recovery with the No.11 again pressuring 20 c/lb.
This opportunity was taken by industrial consumers who have increased their long paper holding, though not by a massive amount.
The spread structure has remained relatively steady, which will likely inhibit large forward buying from re-export refiners.The withdrawal of specs means there’s room for them to return to the market if the conditions become attractive to them once more.

No.5 London (White Sugar)

The No.5 market has rebounded, after the pressure created by the spec exit.
The H’22 contract is still below historical levels, which could be bearish for physical demand in the short term.

The 2022 white premiums have continued to slowly strengthen.
However, the level remains lower than the margin needed by the refineries, especially considering how high freight rates have impacted refiner costs.
This level is making it difficult for re-export refineries to operate at present.

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