Wednesday May 20, 2020

World sugar futures turned in a strong performance today as the July moved comfortably above 11.00. July ranged from 10.85 to 11.30 before settling 34 higher at 11.19. The back months settled from 26 to nine higher. The energy complex and Brazilian currency aided sugar’s cause today or at least did no harm. July led the balance of the board higher – the July/October traded from three under to six over and last traded at three over. October/March traded from 72 under to 62 under and last at 73 under. Technically, there is trendline resistance overhead at 11.54 – a breach of this would likely generate another leg higher.

Option watch: Option volume was 30,058 contracts consisting of 20,894 Calls and 9,164 Puts. Volatility was lower across the board. Paper was a live seller of Calls and we saw paper rolling up October Calls through 2x1 Call Spreads. Trades of note: 850 July 11.00 Calls vs 11.16 trade 50 (paper sells), 700 July 13.00 Calls trade 4-6, 600 July 9.25 Puts trade 3, 500 October/July 12.00 Call Calendars trade 33, 500 July 12.00 Calls trade 15, 400 July 12.00/10.50 Strangles trade 36, 276 July 11.00 Straddles trade 86-89, 1,400 October 11.50/10.50 2x1 Call Spreads vs 11.11 trade 16, 600 October 11.50/10.50 2x1 Call Spreads vs 11.25 trade 21, 2,000 October 11.75 Calls trade 53-58, 500 October 12.50/10.50 Fences vs 11.12 trade 1, 400 October 11.00/10.50 Put Spreads vs 10.95 trade 24, 375 October 11.50 Calls vs 11.11 trade 63-64, 300 October 10.00 Puts vs 10.92 trade 40 and 300 March 10.50 Puts trade 61-62. ATM Vol's: July 11.25 Straddle 84-86 - vol 35.55, -.40 % August 11.25 Straddle 113-116 - vol 32.75, -.50 % October 11.25 Straddle 158-162 - vol 31.50, -1.0 % March 11.75 Straddle 231-236 - vol 29.00, -.40 % Option open interest: Calls 321,487 +2,989, Puts 279,099 -1,368 - total 600,586 +1,621

The EU imported 25 % more sugar on year as of mid-April, while exports were 56% lower, according to European Commission (EC) data. There is a concern that sugar imports under the WTO CXL erga omnes TRQ will weigh on domestic prices, according to an analysis in Agrodigital, which urged the EC to implement some duty protection. In the USMCA region: US futures were steady today. July settled 15 higher at 25.95 and the back months from unchanged to 26 higher. The day’s volume was spread from near July at 25.80 through the Q3 and Q4’21 months at 26.90-.91. November’20 and January were active, trading up to 26.26 and 26.81 respectively. Mexican production in the week ended May 16th totaled 121,913 tonnes tel quel, down 41.5 % from the 208,466 tonnes made last year in the same week. Seven mills closed during the week, on average about 2.5 days ahead of plan – 30 mills have now closed, leaving 20 operating. Total production from the crop now stands at 4.953 million tonnes, down 1.096 million tonnes from last year. Mexico is on track to consume 4.28 million mt of sugar this season, up five percent from last season, according to Zafranet. Monthly demand averaged 380,000 tonnes since October, up from 350,000 tonnes last year. The fourth tranche of the Global
Refined Sugar TRQ opened Monday with just 8.35799 % of potential entries accepted, indicating an overage of 131,575 tonnes (143,565 tried, 12,000 succeeded). It is only slightly more difficult to get accepted into MIT (6.7 %), but you have to be really smart to even apply to MIT in the first place. Three tranches remain covering a total of 34,437 tonnes.

Regards,

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

JSG Indications: Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Raws: USNH: 25.75 25.95 26.25 26.80 26.75 26.85 Mexican peso v USD: 23.2064 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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