Tuesday February 11, 2020

World sugar futures broke higher today, settling 37 higher in March at 15.41 and from 30 higher in May to seven lower in March’22. Outright traded volume was 311,261 lots. On the middle day of the mainstream index fund roll, March/May traded from 26 to 39 over and last at 37 over – 68,888 lots of March May traded on spread and a further 7,314 lots on TAS between par and one under. March OI stood at 316,777 lots prior to today’s activity. May/July traded from nine to 15 over and last at 13 over. Crude was confined to a relatively narrow range on either side of $50.00 while the BRL eased to yet another low against the dollar at 4.3406 before retracing marginally. In London, the March OI is still quite high at 27,053 lots with expiry fast approaching. March/May touched $14.60 today and the March premium again breached $100 today.

Option watch: Option volume was 50,816 contracts consisting of 33,049 Calls and 17,767 Puts. March volatility still being sold with the rest of the board slightly higher by sessions end. Option orders were predominantly initiated from the sell side and that is why volatility had a difficult time gaining any traction. Trades of note: 1,200 March 14.50/15.50 Call Spreads trade 77-80, 750 March 15.00 Puts vs 15.45 trade 5-6, 750 March 14.75/14.50/14.25 Put Trees trade 1, 500 March 16.00/16.50 Call Spreads trade 1, 500 March 15.00 Calls vs 15.25 trade 34-35, 500 March 15.00/15.50 Call Spreads vs 15.09 trade 19, 500 March 15.00/15.75 Call Spreads vs 15.39 trade 8, 1,994 May 15.25/13.25 Fences vs 14.82 trade 35-36, 700 May 15.00/July 16.00 Call Spreads trade 21, 500 May 13.50 Puts trade 13, 425 May 14.00 Puts vs 14.80 trade 27-28, 400 May 14.25/14.00 Put Spreads trade 7-8, 250 June 15.00 Straddles trade 135-136, 750 July 15.00/16.00 Call Spreads trade 30-33 and 984 October 14.50/12.00 Fences vs 14.86 trade 101. CSO’s: 500 July/October Flat/-10 Fences trade 8-9. ATM Vol’s: March 15.25 straddle 38-40 - vol 22.75 April 15.00 Straddle 91-93 - vol 25.25, unchanged May 15.00 Straddle 126-128 - vol 25.30, +.15 % July 14.75 Straddle 153-155 - vol 22.30, +.15 % October 14.75 straddle 184-186 - vol 20.45, +.15 % Option open interest: Calls 424,969 +2,450, Puts 299,052 +2,475 - total 724,024 +4,925

The JOB Economia Index for sugar in 50kg bags in Sao Paulo is down 1.6 % on the week at $304.00 per tonne (13.78). The price equivalent for hydrous ethanol with raw exports FOB is 15.15, which is unchanged on the week and much improved versus levels a year ago. Anhydrous ethanol prices are valued around 15.45, unchanged on the week. The head of the Indian Sugar Mills Association has suggested that cane farmers will be encouraged by the good rainfall this year which will push up the cultivation area in Maharashtra, Karnataka and Tamil Nadu. As a result, sugar output in 2020/21 could rebound to 30.0 million metric tonnes, compared to 26.0 million mt forecasted in 2019/20, although the monsoon season will be key. Indonesia might not be able to produce 2.0 million metric tonnes of sugar this year as planned because of the late start of the rainy season, pests and a higher fertilizer cost, according to the Indonesian Sugar Cane
Farmers Association. Meanwhile, some of the 1.4 million tonnes of raw sugar authorized for imports in the first semester of 2020 will start arriving next week, according to the Indonesian Refined Sugar Association. The overall import quota in 2020 should reach 3.2 million mt, compared to 2.8 million mt last year.

In the USMCA region: US futures trading was subdued today, leaving prices to settle 11 higher in May at 26.56, 15 higher in July and unchanged elsewhere. Buying in the July at 27.00 anchored the board – May/July traded from 51 to 40 under and May traded from 26.49 to 26.60. The USDA released updated S&D data for the US and Mexico today. The report took care of some book keeping: reducing the estimate of Mexican production by 100,000 tonnes tel quel (116,844 short tons raw value), adopting the changes made by Conadesuca on February 5th, and increasing US imports under the TRQ by 70,000 tons to reflect the TRQ shortfall reallocation announced by the US Trade Reps office on February 6th. Mexico’s exports to the US are now estimated at 1.717 million tons based on availability. All else held constant, based on today’s figures Mexico’s Export Limit in March would be 1.857 million tons – 140,000 tons above Mexico’s export availability as per today’s report. The USDA does have an estimated 435,000 tonnes going to Mexico’s IMMEX program – 65,000 tonnes more than the Conadesuca estimate, so there is room for discussion regarding Mexico’s ability to fill its Export Limit. Mexico must declare the extent to which it can fill the Export Limit by the end of March. For those keeping track, since the turn of the year, the March #5 White Sugar contract has rallied from $359.20 to $437 basis today’s settlement – an increase of nearly $80 per tonne or roughly 3.50 cents per pound. World whites are fast approaching As US refined prices have held relatively flat during the period,

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 27.25 26.80 26.50 26.50 Mexican peso to USD: 18.6587 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.