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Monday February 10, 2020

World sugar futures probed to within a few points of the long-term high established last week and posted the first settlement above 15.00 since the first week of January 2018. Prices settled 12 higher in March at 15.04, five higher in May and from seven higher to eight lower in the back months. Outright traded volume was again sturdy at 236,769 lots. March peaked at 15.10, three points shy of last week’s high, before lapsing into consolidation mode. On spread, March/May traded from 23 to 31 over and last at 30 over. May/July traded from nine to 14 over and last at 10 over. Sugar #11 has been nothing if not resilient, decoupling from the Brazilian real (historic low against the dollar at 4.3290 today) and energy (WTI Crude back under $50.00 today). The Whites market continues to show leadership, with the March premium topping $101.50 today.

Option watch: Option volume was 23,062 contracts consisting of 15,476 Calls and 7,586 Puts. Volatility saw pressure across the board. Trades of note: 1,500 March 15.50 Calls live trade 7-9, 1,000 Merch 16.00 Calls live trade 2, 1,100 March/October 13.00 Call Spreads trade 13-14, 500 March 13.00/14.75 Call Spreads vs 12.00 Put trade 161, 500 April 13.75 Puts trade 11, 200 April 14.75 Straddles vs 14.77 trade 96, 838 May 15.50/13.25 Fences vs 14.80 trade 27, 387 June 13.75 Puts vs 14.58 trade 29-30, 358 June 14.00 Puts vs 14.58 trade 38-39, 1,000 July 15.50 Calls vs 14.68 trade 47, 300 July 14.75 Straddles trade 155 and 500 October 15.50/13.50 Strangles vs May 14.00 Call trade flat-2. CSO’s: 250 July/October Flat/-10 Fence trades 7. ATM Vol’s: March 15.00 Straddle 43-46 - vol 24.30, -2.7 % April 14.75 Straddle 91-93 - vol 24.90, -.80 % May 14.75 Straddle 123-126 - vol 24.95, -.15 % July 14.75 Straddle 152-155 - vol 22.15, -.20 % October 14.75 Straddle 183-186 - vol 20.40, -.20 % Option open interest: Calls 422,519 +1,845, Puts 296,577 +1,493 - total 719,096 +3,338

Highlights from Al Khaleej Sugar Conference in Dubai: • Greenpool has reduced its current year Thai production estimate to 9.55 million tonnes from over 12.0 million tonnes, and sees 2020-21 production of 10.2 million tonnes. • Greenpool revised its global sugar deficit estimate for next season to 3.8 million tonnes for ~1.0 million tonnes. • Alvean is considering the possibility of a Thai crush that could be 77.0-78.0 million tonnes • Cofco has forecast Thai sugar production at 9.0-10.0 million 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 of 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



In the USMCA region: US futures trading was centered on the expiring March futures. Late-inthe-game position squaring lifted the March to a 25-point premium to May. Prices settled unchanged in March at 26.00, one higher in May at 26.45, 25 and 20 lower in July and September respectively and unchanged in the FY’21 positions. The March expiry saw 817 lots delivered by Sucden Americas. ASR received 574 lots and LD/Imperial Sugar 243 lots. WASDE numbers will be released at noon tomorrow, and will see last week’s short-fall reallocation incorporated into the S&D. It seems reasonable that the recent 100,000-tonne reduction to the official Mexican production estimate will also be adopted, which should make clear that Mexico will be unable to fully meet US import needs.

Regards,

JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000

JSG Indications: Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Raws: USNH: 26.00 26.55 27.35 26.80 26.50 26.50 Mexican peso to USD: 18.6977 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.

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