Wednesday March 25, 2020

World sugar futures added modestly to the recent gains today – May settled 14 higher at 11.41 and the back months from 16 higher in July to seven higher in red March. Outright traded volume was 166,229 lots. On spread, May/July traded from 10 to 20 over and last at 14 over. July/October traded from 14 under to nine under and last at 11 under. WTI Crude sent mixed messages today, spending time above and below unchanged, but swooned sufficiently through the morning in New York to undermine sugar’s rally before recovering. The Brazilian real strengthened gradually from 5.0972 last night to 5.0180 by the time the Sugar #11 market closed for the day, giving some support to sugar.

Option watch: Option volume was 24,496 contracts consisting of 14,851 Calls and 9,645 Puts. Volatility moved lower across the board. Paper bought a chunky July 2x1 Call Spread. Trades of note: 500 May 9.50 Puts trade 5, 250 May 10.00 Puts trade 8, 300 May 12.25 Calls vs 11.42 trade 19, 200 May 11.25 Straddles trade 90, 700 June 11.00/10.00 Put Spreads trade 28-30, 400 June 11.50 Straddles vs 11.32 trade 122, 2,658 July 13.00/12.00 2x1 Call Spreads trade 1-2, 500 July 9.50/12.50 2x1 Fences trade flat/1, 250 July 11.25 Straddles trade 144, 250 October’21/October 12.50 Put Calendars trade 3 and 350 May’21 14.00 Calls vs 11.73 trade 47. ATM Vol's: May 11.50 Straddle 88-90 - vol 40.35, -1.35 % June 11.25 Straddle 118-123 - vol 35.10, -.90 % July 11.25 Straddle 141-146 - vol 33.45, -.90 % October 11.50 Straddle 186-192 - vol 29.95, -.30 % Option open interest: Calls 382,611 +8,187, Puts 319,015 +2,615 - total 701,626 +10,802

Rabobank has projected a 600,000-tonne world sugar surplus for 2020-21 on the heels of a 6.7 million-tonne deficit in 2019-20, down from the prior estimate of 8.2 million tonnes. A 45 % sugar/55 % ethanol mix in Brazil for 2020-21 is an important driver for the updated S&D. Petrobras made another massive cut in gasoline prices on Tuesday, this time 15 % at the refineries. The previous cuts over the last two weeks were 9.5% and 12% respectively. China imported 320,000 metric tonnes of sugar in the Jan-Feb period, up 119 % year on year, according to customs data. Imports from Brazil in the May-June period could reach a record high because the current import margins are very profitable. The supply from Pakistan and Thailand, including smuggling, would be much lower because of the lower crops in both countries. Combined with consumption returning to normal, refineries may be looking at stocking for up to two years ahead. Indonesia is expected to issue permits for 550,000 tonnes of raw sugar imports to augment domestic supply ahead of peak demand season, according to an official at the trade ministry.

In the USMCA region: US futures settled unchanged in May at 26.75 and from five lower to 10 higher elsewhere today. The market continued to shift supply from the summer back to May, with another 150 lots of May/July trading at 10 points discount. Refiners seem content to pay the relatively small discount given the nearby demand related to the recent consumer stockpiling and
traders seem happy to advance sugars at remunerative levels. The May’21 futures were active at 26.75 and the Q3’21 futures at 26.90-.95. Mexican sugar production in the week ended March 21st exceeded last year’s production marginally (1,831 tonnes), totaling 262,857 tonnes. Unfortunately, it took 6.6 % more cane from 30.25 % more hectares to produce just 0.7 % more sugar. For the crop year to date 3.324 million tonnes of sugar has been produced versus 4.021 million tonnes last year. All but one mill was still crushing during the week. Production of “other sugars” during the week was 19,598 tonnes higher than last year at 44,650 tonnes. For the crop to date, 451,211 tonnes of “other sugars”, with pol of less than 99.2 degrees, have been produced – 55 % of the 815,605-tonne “other sugars” portion of the 1.422 million-tonne export limit Mexico staked out earlier in the week.

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: 26.40 26.50 26.75 26.80 26.80 26.75 Mexican peso to USD: 23.8940 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.