Thursday May 21, 2020

World sugar futures pulled back today, consolidating the past three sessions’ gains. July settled 21 lower at 10.98 and the back months from 16 lower to unchanged. Outright traded volume was 121,064 lots. On spread, July/October traded from five over to three under and last at three under. October/March traded from 61 under to 69 under and last at 68 under. Sugar’s losses came despite steadiness in the energy complex (spot WTI Crude $34.66) and in the Brazilian real (as high as 5.5673 during the #11 trading session).

Option watch: Option volume was 21,543 contracts consisting of 11,931 Calls and 9,612 Puts. Volatility was slightly higher on the session. Paper was seen as a live buyer of July and August Puts and a buyer of October-based Call Spreads. Trades of note: 1,000 July 10.50 Puts trade 2325, 800 July 9.75 Puts trade 4-6, 465 July 12.00 Calls vs 11.28 trade 17, 300 July 10.25/9.00 Put Spreads vs 10.94 trade 12, 250 July 12.00/10.00 Fences vs 10.96 trade 1, 500 August 10.75 Puts trade 38, 500 August 10.50 Puts trade 35-37, 1,900 July 14.00/16.00 Call Spreads trade 9-10, 1,300 October 12.00/14.00 Call Spreads vs 11.24 trade 36, 400 October 11.00/14.00 Call Spreads vs 11.09 trade 70, 500 October 10.00 Puts trade 31, 300 October 10.00/9.00 Put Spreads trade 19-23 and 1,150 March 15.25/11.25 Fences vs 11.79 trade 58. ATM Vol's: July 11.00 Straddle 82-84 - vol 36.53, +.10 % August 11.00 Straddle 112-114 - vol 33.25, +.10 % October 11.00 Straddle 158-160 - vol 32.10, +.15 % March 11.75 straddle 233-236 - vol 29.22, +.10 % Option Open Interest: Calls 326,863 +5,376, Puts 278,483 -616, Total: 605,346 +4,760

The USDA’s Foreign Ag Service has published its biannual Sugar: Markets and Trade report, which can be seen here. According to Williams SA the Brazilian line-up of raw sugar vessels loading/nominated to load is now 3.251 million tonnes of sugar - the highest it has been at this time in more than a decade as new nominations have poured in following the May #11 expiry. This compares with 2.682 million tonnes last week and 694,135 tonnes last year. There are several vessels that will present in Santos that already will wait a month before loading. Approximately 175,000 tonnes of sugar shipped on the week. New nominations include 34,390 tonnes to Canada; 120,000 tonnes to China; 129,700 tonnes to Iran; 33,000 tonnes to Iraq; 84,930 tonnes to Nigeria; 35,000 tonnes to Taiwan; and 94,500 tonnes to Yemen. In Maceio, there are now three vessels loading a total of 99,803 tonnes destined for the US. There are 45 vessels waiting to load in Santos and currently 33 have not nominated their destination according to the Williams report. According to the Thailand Meteorological Department, the weighted average rainfall in major sugarcane growing regions of Thailand from May 1st to May 17th was 44 mm, 51 mm below the historical average rainfall for the same period of 95 mm. Given the sub-optimal weather to date, Tropical Research is revising its estimate of the Thai sugarcane crush in the 2020-21 crop year to 75.9 million tonnes, 9.1 million tonnes lower than the pre-revision estimate of 85.0 million tonnes.

In the USMCA region: US futures settled five lower in July at 25.90 and from 10 higher in September to unchanged in the back months. Prices were again steady, with July trading up to 26.00. The main event today was a cargo’s worth of July/September that traded from five to 10 points discount. Mexican sugar exports through May 17th have totaled 966,691 tonnes, 52.1 % of the estimated exports of 1.857 million tonnes for the fiscal year. In the most recent week 17,386 tonnes shipped to the US and 6,342 tonnes shipped under Mexico’s IMMEX program. Looking at the prospects for the tail of the current Mexican crop, it is interesting to note that 30 mills had closed as of May 16th (Week 33) versus just 12 mills by the end of last year’s Week 33. Last year, it was the last week of May before the 30th mill shut down – the remaining 20 mills produced ~167,000 during the remainder of the crop. Based on this metric, the USDA estimate of 5.125 million tonnes tel quel for the crop is likely within 25,000 tonnes of reality.

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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