Wednesday June 24, 2020

World sugar futures turned in as much of a whip-saw session as one can accommodate in a 40point range with less than 140,000 lots of activity. July sagged initially to 11.65, gravitated back to unchanged a few hours into the session and then popped to 12.05 following a UNICA report that could generously have been construed as modestly constructive. The gains quickly dissipated and July revisited the early 11.65 low before settling four lower at 11.75. October settled eight lower at 11.84 and the back months from eight to 21 lower. Outright traded volume was 139,481 lots. July OI stood at 53,509 lots as of this morning – less than half of the 119,031 lots open at the same point last year. There were 15,946 lots of July EFP’s and 540 lots of July EFS’s posted today. On spread, July/October traded from 13 under to seven under and last at nine under today – 23,898 lots of the spread traded. October/March traded from 59 to 65 under and last at 64 under. The August #5 settled $5.90 lower on the day at $356.70 and the nearby whites premium was last valued at $96.75. The Brazilian real gave back the past two sessions’ gains, easing to 5.3190 prior to noon – the BRL settled at 5.1544 on Tuesday. The energy complex was under pressure today (spot WTI was down more than 7.5 % at the low).

Option watch: Option volume was 16,753 contracts consisting of 9,230 Calls and 7,523 Puts. Volatility had a hard time finding buyers, and finished down across the board. Trades of note: 450 October 12.50/August 12.00 Diagonal Call Spreads vs 12.05 trade 7-8, 650 August 13.00 Calls trade 4-7, 700 September 11.00 Puts vs 11.80 trade 19, 500 September 12.00 Puts vs 11.86 trade 58, 450 September 13.00/11.00 Strangles trade 34, 500 October 13.50/11.00 Strangles trade 45, 250 October 11.25 Puts vs 11.85 trade 35, 800 March 14.00 Calls vs 12.45 trade 46 and 700 March 12.50 Calls vs 12.53 trade 96. ATM Vol’s: August 11.75 straddle 63-66 - vol 27.80, -2.2 % September 11.75 Straddle 97-99 - vol 26.85, -2.0 % October 11.75 straddle 120-123 - vol 27.00, -1.5 % March 12.50 Straddle 192-195 - vol 24.25, -1.0 % May 12.25 Straddle 192-200 - vol 22.50, -1.0 % Option Open Interest: Calls 259,405 +403, Puts 224,055 +491, Total: 483,460 +894

UNICA released crop data for the center-south through the first-half of June, showing results a bit below industry estimates. The report noted an improved environment for hydrous ethanol sales, meaning a smaller deficit compared to last year than seen during May. Sugar production during the most recent period was 2.549 million tonnes, up from 1.87 million tonnes a year ago but a shade lower than the 2.75 million tonne average as per a Bloomberg pre-release survey. Ethanol production was 1.834 billion liters versus 2.127 billion liters last year. The cane crush was lower than last crop at 41.740 million tonnes of cane (42.555 last year). For the crop to date, 10.569 million tonnes of sugar and 8.040 billion liters of ethanol have been produced from 186.579 million tonnes of cane. Last year at the same point 6.728 million tonnes of sugar and 8.348 billion liters of ethanol had been made from 171.529 million tonnes of cane. ATR has averaged 128.75 kilos of
total sugars from each tonne of cane versus 121.27 kilos last year. For the crop to date 46.17 % of cane has been directed to sugar production versus 33.94 % last year. In the most recent period 47.11 % of cane was directed to sugar production.

Green Pool has estimated the 2020-21 global sugar surplus at 4.56 million tonnes, up from the prior estimate of 4.29 million tonnes. Lower consumption and an increase in Green Pool’s estimate of Brazilian production to 36.5 million tonnes from 36.4 million tonnes previously were the main drivers in the new estimate. Ample water in reservoirs following bountiful rainfall last year may lead to over 14 % rise in India's sugar production in the season starting October, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, according to Cogencis. The federation sees India's 2020-21 (Oct-Sep) sugar output at 31.2 million tonnes. For the 2019-20 season, it had pegged the output at 27.2 million tonnes. Based on data from Cepea/Esalq, the ex-mill price of hydrous in Sao Paulo dropped by 0.83 % last week – the first drop in two months. The price of anhydrous was up by 0.82%. As of Monday, there export sugar commanded a $44.75 per tonne premium over domestic hydrous prices, according to S&P Global Platts. Hydrous demand is still 30 % below last year and gasoline has gained market share, according to UNICA.

In the USMCA region: US futures settled unchanged in September at 26.00 and a uniform four lower across the balance of the board. The day’s 127 lot volume was confined mainly to the spot September at 26.00. Mexican sugar production for the week ended June 20th totaled 23,576 tonnes tel quel, bringing total production from the crop to 5.253 million tonnes. Production of sugar pol’ing less than 99.2 degrees has totaled 707,260 tonnes and production od refinada has totaled 1.256 million tonnes. The four remaining mills are expected to finish grinding for the season over the next several days.

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: 25.80 25.95 26.15 26.45 26.65 26.85 Mexican peso v USD: 22.7442 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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