Monday March 23, 2020

World sugar futures settled 13 higher in May at 11.04 and from eight to two higher elsewhere, completing the first two-day win streak for spot sugar in over a month. Outright traded volume was 150,805 lots. May bottomed at 10.72 early in the session and peaked at 11.15 late in the session. On spread, May/July traded from six over to 15 over and last at 14 over. July/October traded from 16 under to 12 under and last at 14 under. The Brazilian real continued to consolidate in the middle of last week’s range while WTI Crude consolidated just above the lows established at the end of last week.

Option watch: Option volume was 26,170 contracts consisting of 16,029 Calls and 10,141 Puts. Volatility seems to lose some steam on a positive day. Paper was most active from the buys side of July Call Spreads and buying Calls on July Fences. Trades of note: 1,000 May 9.50 puts trade 7-8, 500 May 9.00 Puts trade 4, 435 May 10.50 Puts vs 11.00 trade 24, 250 May 11.25/12.00 Call Spreads vs 11.00 trade 20, 2,025 July 11.50/9.50 Fences vs 10.94 trade 27, 2,000 July 12.00/13.00 Call Spreads vs 10.85 trade 16, 775 July 9.50/October 11.75 Fences vs 10.84/10.98 trade 36, 699 July 12.00/10.00 Fences trade -7/+2, 250 July’21/July 12.50 Put Calendars trade 7, 1,000 October 14.00/16.00 Call Spreads trade 11-12, 675 October 12.25/10.00 Strangles vs 11.08 trade 92 and 300 October 11.00 Puts vs 11.05 trade 88. ATM Vol’s; May 11.00 Straddle 88-91 - vol 39.40, -1.8 % June 11.00 Straddle 118-122 - vol 35.00, -.75 % July 11.00 Straddle 141-145 - vol 33.90, -.85 % October 11.00 Straddle 179-185 - vol 29.80, -.50 % Option open interest: Calls 366,354 +7,795, Puts 311,114 +7,494 - total 677,468 +15,289

India is likely to export 4.5 million tonnes of sugar in 2019/20, down almost a fifth from an earlier estimate as a drop in global prices due to the Coronavirus outbreak makes overseas sales unprofitable for mills, a senior industry official said. “There is no export parity after the recent fall in global prices. At this price level new deals won’t take place,” Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd told Reuters. The world is facing a shortage of containers due to the restrictions in China which have just been implemented, including a decision by some ports to quarantine incoming ships for 14 days, according to Bloomberg. Market participants see this causing delays of up to one month, disrupting the supply chain. SeaIntelligence Consulting said 10 % of the world's container deliveries could be lost due to the coronavirus, in line with what happened during the 2009 financial crisis. However, IHS Markit said that the container shipping industry was well prepared and therefore unlikely to face bankruptcies.

In the USMCA region: US futures saw routine book squaring in the FY’21 positions today. Prices settled 10 lower in May at 26.70 and from 15 lower to unchanged in the back months. The Q1’21 positions were active at 26.75 and the May at 26.80. The Government of Mexico today notified
the US DOC that, after prioritizing domestic needs, Mexico will be able to ship 1,421,901 tonnes of sugar to the US in the current fiscal year. This is made up of 815,605 tonnes tel quel of “other sugars” and 606,295 tonnes of refined sugars, pol’ing 99.2 degrees and higher. The amount is essentially the December Export Limit amount (1.461 million short tons - 80 % of 1.827 millionshort ton Target Quantity of US Needs) plus the 200,000-ton increase announced earlier this month (1.661 million strv=1.421 million mttq). The amount is 496,000 short tons higher than the USDA’s estimate in the March WASDE but 272,000 tons below the 1.933 million-ton Export Limit calculated by DOC and offered to Mexico earlier in the month. Inserting the 1.661 million tons figure into the March WASDE yields an 11.28 % stocks/use ratio. It would take an additional 272,000 tons of stocks to achieve a 13.5 % stocks/use ratio. As a side note, the Mexican peso continued its historic descent, easing to 25.2423 to the dollar this afternoon.

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: 26.90 26.80 26.90 27.00 26.80 26.85 Mexican peso to USD: 25.3232 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.