MORNING SUGAR REPORT

Monday February 10, 2020


WORLD SUGAR #11
World sugar futures have traded higher this morning, led by a very strong London market. March is last seven higher at 14.99, trading from 14.92 to 15.08 at this point. May has traded from 14.69 up to 14.83 and is last five higher at 14.74. More than 70,000 lots have traded between March and May to this point on the second day of the index roll. On spread, the March/May has traded from 23 over to 27 over and last at 24 points premium. The May/July has traded from 10 over to 14 over and last at 12 over.
SUGAR #11 OPEN INTEREST:
 H0: 342,487 -19,431  K0: 316,177 +10,959  N0: 227,709 +11,702  V0: 169,697 +2,905

TOTAL: 1,233,986 +7,188
 JSG Spec Live Call: +145,500 long  Prices last year: 12.90
SUGAR #11 OPTION WATCH

ATM VOLS: h 15.00 straddle 47-50 vol 26.05 -.90% j 14.75 straddle 94-97 vol 25.95 +.20% k 14.75 straddle 127-130 vol 25.35 +.30% n 14.50 straddle 151-155 vol 22.35 +.15% v 14.50 straddle 186-190 vol 20.85 +.35% Trades of note: 1,400 h 15.50 c trade 8-10 500 j 13.75p trade 11 200 j 14.75 straddles vs 14.77 trades 96 500 k 13.50p trades 16 500 k 15.00 calls trade 55-58
MACRO BYTE

China’s consumer inflation rose to its highest level in more than eight years in January as hundreds of millions of Chinese struggled to cope with a deadly coronavirus outbreak that has raised anxiety levels and pushed up the prices of many household goods. China’s consumer-price index climbed 5.40% in January from a year earlier, the highest reading since October 2011, the National Bureau of Statistics said Monday.
Brazil’s economists cut their inflation forecasts following a consumer price reading that was much lower than expected and corroborated views that a meat price surge is passing. Analysts in a central bank survey cut this year’s inflation forecasts to 3.25%, down from a previous estimate of 3.40% and well below the 4.0% target.














LONDON #5

In London, March, which expires Friday, is last $0.30 higher at $428.40 trading from $427.70 to $433.40 to this point, a new high for the move. On spread the March/May is last $0.50 lower at $11.40 premium. The March/March white premium is last at $99.00, up $2.00 on the day.
GLOBAL FUNDAMENTALS
Cash-wise: The Supplemental Report CFTC Commitment of Traders Report showed a net spec long position, exclusive of the index position, of 129,984 lots as of Tuesday February 4th. This number featured less longs added than our expectations while total open interest in the market sets a new record daily. March futures traded from 14.36 to 15.13 and back to 14.64 during the reporting week, as March traded to the highest level seen on Sugar’s nearby contract in more than two years. This week, the large speculators covered 10,714 longs and covered 2,759 shorts to be net long 77,637 lots, while the small specs added 12,304 longs and covered 86 shorts to be net long 52,347 lots. The index funds added 12,143 longs and also 8,952 shorts to be net long 258,788 lots. During the week, the commercials added 16,643 longs and also added 19,843 new shorts to be short 209,751 lots. The market continues to operate with a record open interest and a gross commercial short that has never been bigger, encouraged by a failing Brazilian currency that has fallen to record lows. Sugar, however, continues to behave as the lone outlier in a general commodity complex that has started off the year extremely weak, pressured by the energy sector. Constructive market fundamentals, a firming cash market and the demand for the refined product has encouraged the new spec long to protect their investment in the wake of general macro turbulence. We continue to expect further strength.

From our Macro Minutes: Over the course of the COT week, the U.S. dollar depreciated by 0.06% while the Bloomberg Agricultural Subindex fell by 2.13% - since Tuesday, the U.S. dollar traded to its highest level since October 11th and finished the week on the high at 98.684. President Trump is expected to release a $4.80 trillion budget on Monday that charts a path for the start of a potential second term, proposing steep cuts to social-safety-net programs and foreign aid along with higher outlays for defense and veterans. Federal Reserve policy makers and personnel will be in the spotlight this week as the global economy continues to grapple with the impact of the coronavirus outbreak. Fed Chair Jerome Powell will deliver his semi-annual testimony before Congress, with the economic cost of the rapid spread of the virus likely to be one of the issues he’s questioned on. This week will also see a host of other Fed speakers, with about a half dozen Fed officials due to make public comments. The European Commission will update its economic forecasts on Thursday and offer its take on the recent stabilization in the area’s economy.





According to Archer Consulting’s weekend report, ANP (National Petroleum Agency) has closed the consumption figures in Brazil in 2019: 60.7 billion liters total, the greatest consumption in history, divided into 22.5 billion of liters of hydrous, 10.3 billion liters of anhydrous and 27.9 billion liters of A gas. However, in equivalent gas, the consumption for 2019 closed at 53.95 billion liters, just 200 million below the greatest volume in history occurred in the twelve-month accumulated in June/2015. We have no doubt that 2020 will be a year of record consumption and, therefore, of good support for prices.
Highlights from Al Khaleej Sugar Conference in Dubai:
 Alvean is considering the possibility of a Thai crush that could be 77.0-78.0 mmt  Cofco has forecast Thai sugar production at 9.0-10.0 millon tonnes  Cofco expects India to export 4.0 million tonnes of sugar this season  Cofco mills in Brazil expected to crush 17.0 million tonnes if cane this year (15.2 in 19/20)  Al Khaleej has been operating at full capacity since late December after a “bad” 2019  Pakistan has banned sugar exports in an effort to control domestic prices




GLOBAL CURRENCY UPDATE  USD: 98.297 -0.14%  BRL: 4.3060 -0.56%  INR: 71.1971 +0.02%  MXN: 18.625 -0.10%


Best Regards,

Jeff Dobrydney Senior Vice President Head of Futures & Options JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. 203.853.3000 www.jsgcom.com

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