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World sugar futures finished the week two lower in March at 15.33 while the back months settled from two higher to four lower. Traded volume was 104,829 lots. The March consolidated in the upper reaches of Thursday’s range through the early part of the session before testing up to a new high for the past month at 15.49. The rally was short-lived and prices slumped back to finish little changed. On spread, March/May widened back out from 18 to 25 under and last traded at 24 under. May/July traded from 21 to 24 under and last at 24 under. Technically, March posted a full day’s range above the 40-day average for the first time since late June, which says volumes about the market’s trajectory for the past seven months or so. March also posted a full range above the downtrend originating at the October 9^th high. The chart looks good – the question is whether the soggy fundamentals and whipsaw macro factors will cooperate.

Option watch: Option volume was 28,799 contacts with 20,000 of it in the front month March. Volatility was slightly higher - March vol is 24.17, up .32 %; May vol is 21.63, up .22 %; July vol is 19.46, up .07 %; and October vol is unchanged at 18.32 %. Trades of note: 2,100 March 15.75/15.00 Fences trade 2-3, 2,000 March 14.50 Puts vs 15.35 trade 13, 1,000 March 14.50 Puts vs 15.33 trade 13, 1,000 March 16.00 Calls vs 15.47 trade 25, 1,000 March 14.75 Puts vs 15.34 trade 19, 750 March 16.00/17.00 Call Spreads vs 15.44 trade 17, 750 March 16.00 Calls vs 15.30 trade 19, 725 March 15.25 straddles vs buying 15.44’s trade 89, 370 March 15.00 Straddles vs 15.30 trade 88, 365 March 16.50/17.00 Call Spreads trade 6, 250 March 17.00 Calls vs 15.4 trade 6, 500 July 17.00 Calls vs 15.80 trade 37, 1,300 October 17.00 Calls vs 16.20 trade 65-66, 1,200 March’16  17.25 Calls vs 16.87 trade 99-100, 750 March’16 16.50 Puts trade 95 and 380 March’16 18.00/20.00 Call Spreads vs 15.00 Puts trade flat - +1.

The Times of India reports that the Cabinet Committee on Economic Affairs approved an increase in the Fair and Remunerative cane price by 4.545 %, from 220 to 230 Rs per quintal effective October for the 2015-16 campaign. Indian sugar production has risen to 10.3 million tonnes through January 15th, up 19% on the year from 8.65 million tonnes produced in the same period a year earlier. Maharashtra has produced 4.3 million tonnes (3.1mmt a year ago), Uttar Pradesh has produced 2.5 million tonnes (1.98mmt a year ago) and Karnataka output is 1.7 million tonnes or similar to a year earlier.

Friday’s CFTC Commitment of Traders Supplemental Report showed an impressive amount of short covering during the week ended Tuesday. The specs were net short 83,114 lots, net of the index fund long - 21,949 lots less short than the prior week. The large specs covered 21,280 shorts and liquidated 1,575 longs to be net short 80,193 lots. The small specs added 2,519 new longs and 275 new shorts to be net short 2,921 lots. The supplemental report also showed evidence of index fund redemptions, as the funds liquidated 7,245 longs and covered 172 shorts to be net long 83,114 lots. The index funds liquidated over 2.5 % of their gross long during the week. The futures-only report showed a net spec long of 4,699 lots while the combined report showed a net spec short of 6,750 lots.

In the NAFTAregion: US futures settled 12 higher in March at 25.47 and from seven higher in May to unchanged in September today. A cargo-sized block of July futuresthat traded at 25.40 accounted for the day’s activity. Imperial Sugar Company and AmCane Sugar, LLC today formally requested that DOC continue the AD/CVD investigations against Mexico (See “Nuclear - Or New Clear - Option” in our November Market Update). Interestingly, the October 27^th draft suspension agreement stated, “The Department will terminate this Agreement in the event any party requests continuation of either the antidumping or countervailing duty investigations of Sugar from Mexico.” The December 19^th signed version, on the other hand, reads, “The Department will terminate this Agreement in the event that the GOM requestscontinuation of the countervailing duty investigation of Sugar from Mexico, or Signatories accounting for a significant proportion of exports of Sugar from Mexico request continuation of the antidumping investigation of Sugar from Mexico.” While we do not doubt that Imperial and AmCane had the proper status to request a continuation of the investigations, it is less clear whether their challenge will terminate the suspension agreements. It is a good time to belegal council in the US sugar industry. The Mexican peso, which traded at 14.9930 to the US dollar on January 6^th, strengthened back to 14.4357 on Thursday before settling at 15.5604 Friday.

Regards,

Jenkins Sugar Group, Inc.

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Raws: “Fair value” #16 futures pre-close, or JSG estimate.

This report has been compiled for general informational purposes only. While efforts have been made to ensure accuracy, Jenkins Sugar Group, Inc. assumes no responsibility for errors and omissions.