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Tuesday June 30, 2020

World sugar futures settled from 13 higher in the expiring July at 11.84, 19 higher in October at 11.96 and from 16 higher in March to 12 lower in July’22 following some end-of-quarter contortions. Outright traded volume was 120,076 lots. On spread, July/October ranged from four under to 17 under and settled at 12 under. October/March traded from 63 to 59 under and last at 60 under. March/May traded from 24 over to 30 over and last at 29 over. WTI Crude consolidated just beneath $40.00 and the BRL bounced between 5.4055 and 5.5075. On the continuation chart, Sugar #11 settled 8.5 % (93 points) higher for the month and 13.6 % higher for the quarter but is still down 11.77 % year to date.

At today’s July #11 delivery, 4,993 lots of sugar were tendered in Santos (3,865 lots Raizen, 1,128 lots Sucden). Receivers were Czarnikow 2,362 lots, Louis Dreyfus 1,700 lots and Wilmar 931 lots.

Option watch: Option volume was 15,191 contracts consisting of 11,122 Calls and 4,069 Puts. Volatility was unchanged across the board. Trades of note: 633 August 12.50 Calls vs 12.00/.01 trade 11, 660 August 11.50 Puts trade 11-12, 250 September 12.00 Calls trade 42, 1,426 October 14.00 Calls trade 9-10 (paper buys), 600 October 11.00 Puts trade 20-22, 250 October 12.00 Calls trade 49, 1,240 March 15.00/17.00 Call Spreads trade 16 (paper buys) and 1,000 March 12.50/14.00 1x2 Call Spreads trade 6 (paper sells). CSO’s: 300 March/July flat Puts trade 9. ATM Vol’s: August 12.00 Straddle 53-56 - vol 27.50, -.15 % September 12.00 Straddle 90-94 - vol 26.45, unchanged October 12.00 Straddle 115-117 - vol 26.30, unchanged March 12.50 Straddle 184-186 - vol 23.20, unchanged May 12.25 Straddle 184-190 - vol 21.25, unchanged Option Open Interest: Calls 269,076 +924, Puts 228,251 -969 - total 497,327 -45

The JOB Economia Index for sugar in 50kg bags in Sao Paulo is down 1.4 % on the week at $265.00 per tonne (12.02), through June 16th. The price equivalent for hydrous ethanol with raw exports FOB is now valued around 9.60, which is down 1.8 % on the week and very comparable with where prices were this time a year earlier. Anhydrous ethanol prices are valued around 10.40, up 0.3 % on the week. According to Rabobank’s quarterly market report, Australian sugar production is forecast to be around 4.4 million tonnes in 2020-21, unchanged on the year, while Indian production is seen at 33.5 million tonnes. Thailand production is seen around 8.15 million tonnes. The estimate of global sugar consumption has been revised to decline 1.0 % year on year for the year ending in October.

In the USMCA region: US futures trading remains eerily quiet, with less than a handful of futures trading today. Prices settled unchanged in September at 26.00, unchanged in November and from 27 higher to unchanged elsewhere. USDA published its Area Planted Report today, showing forecast harvested area for beets at 1.1268 million acres – up over 15 % from the actual area
harvested in 2019 due to the various freeze events experienced last fall. Planted area for 2020, at 1.147.9 million acres, is up 1.4 % from last year’s plated area and up 0.8 % from the projected area released back at the end of March.

The final tranche of the 2020 global refined sugar TRQ was oversubscribed at its opening to the tune of 144,389 tonnes, with a success ratio of 6.74 % (our survey from April 30th showed an average overage of 139,808 tonnes – it’s good to have smart friends). Much of this sugar will enter the commerce of the US by paying the high tier duty, some will enter using CAFTA “certificates” and some will wait for the next organic opening. Some may be entered tomorrow, July 1st, 2020, as the USMCA comes officially into force. USTR has provided official notice that the in-quota quantity of the USMCA TRQ for imported refined sugar from Canada for calendar year 2020 is increased by 36,287 tonnes raw value, which may be supplied on a first-come, first-served basis. Refined sugar imported from Canada pursuant to this notice may be made from non-originating raw sugar and must have a sucrose content, by weight in the dry state, corresponding to a reading of 99.5 degrees polarity or more. No certificate for quota eligibility is required for sugar entering under this additional in-quota quantity.

Regards,

JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000 JSG Indications: Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Raws: 25.95 26.15 26.30 26.50 26.65 26.65 Mexican peso: 23.0123
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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