MORNING SUGAR REPORT

Monday July 27, 2020

WORLD SUGAR #11

World sugar futures have surged higher this morning on the back of the Dollar making two-year lows, and some sorely needed fresh fundamentals in sugar, all with a bullish slant. October is now 63 higher at 12.12, as of 10:00AM EST, trading from 11.51 to 12.13 while March is last 53 higher at 12.71. More than 110,000 lots have traded between October and March to this point, surpassing any total the market saw last week. On spread, the October/March has traded from 69 to 57 under and last at 60 points discount. The March/May has traded from 13 to 23 over and last at 22 points premium.

SUGAR #11 OPEN INTEREST:  V0: 381,217 +2,228  H1: 232,118 +2,136  K1: 96,025 +288 TOTAL: 950,387

SUGAR #11 OPTION WATCH

ATM VOLS: u 12.00 straddle 67-69 vol 28.25 +1.7% v 12.00 straddle 101-103 vol 28.25 +.90% f 12.50 straddle 151-156 vol 24.35 +.30% h 12.50 straddle 181-187 vol 24.45 +.20% k 12.50 straddle 187-195 vol 22.60 +.30%

TRADES OF NOTE: 750 JANUARY 12.75C VS 12.44 TRADES 62 250 MARCH 14.00/11.50 FENCE TRADES FLAT 240 OCTOBER 12.25/MARCH 13.00 2X1 CS VS 11.98/12.59 TRADES 1 240 SEPT. 12.50/11.50 FEN VS 11.99 TRADES FLAT MACRO BYTE After days of disagreements between the White House and GOP lawmakers, Republicans are set to release their proposal for the next coronavirus relief bill on Monday, with millions of Americans on the verge of losing expanded unemployment benefits. The Republican bill, which is estimated to cost $1.0 trillion, will include another round of direct $1,200 payments to many Americans, $100.0 billion in aid to schools and universities and additional money for coronavirus testing. India’s coronavirus epidemic is now growing at the fastest in the world, increasing 20.0% over the last week to more than 1.40 million confirmed cases. Infections have reached 1.43 million, including 32,771 deaths, India’s health ministry said. Brazil analysts lifted their 2020 growth estimates for the fourth straight week amid bets the central bank will deliver another round of interest rate cuts in the face of an ongoing coronavirus outbreak. The economy is expected to shrink by 5.77% this year, according to the median forecast of a central bank survey.

LONDON #5

In London, October is last $2.40 lower at trading from $356.60 to $351.60 to this point. On spread the October/December is last $0.60 lower at $3.20 premium. The October/October is last $97.50, unchanged on the day.

GLOBAL FUNDAMENTALS

Cash-wise: Friday’s Supplemental Report CFTC Commitment of Traders Report showed a net spec long position, exclusive of the index position, of 81,412 lots as of Tuesday July 21st, much in line with our expectations. The #11 has been experiencing a large degree of summer doldrums – the traded range during Monday-Friday was less than 50 points. October futures traded from 11.36 up to 11.97 and back to 11.52 during the reporting week. The large speculators added 3,538 longs and covered 2,585 shorts to be net long 62,085 lots, while the small specs covered 2,583 longs and covered 6,155 shorts to be net long 19,327 lots. The index funds added 184 longs and added 1,103 shorts to be net long 242,266 lots. During the week, the commercials added 1,067 longs and added 8,518 shorts to be 171,957 lots short.

Over the course of the COT week, the U.S. dollar depreciated by 1.19% while the Bloomberg Agricultural Subindex increased by 1.38%. Following a new €750.0 billion fiscal stimulus plan approved in the European Union last week, Republicans in the U.S. plan to introduce their proposal for the next coronavirus relief bill on Monday. U.S. Treasury Secretary Steven Mnuchin said “the administration and Republicans are completely on the same page” and he expects Republicans to move very quickly with the Democrats to reach an agreement. However, bipartisan talks have not started yet. The Federal Reserve will meet this week ahead of the second quarter gross domestic product report, which is expected to show a 35.0% annualized decline. Chair Jerome Powell and his colleagues are expected to keep interest rates near zero and repeat their guidance that rates will remain low until the economy is back on track.

Thailand’s sugar crop could shrink next year to the lowest in more than a decade, a further blow to the world’s second-biggest exporter after the worst drought in four decades ravaged this year’s cane plantations. Sugar output in the season that starts in October could plummet to 7.4 million tonnes, the lowest since 2009-10 and down more than 10% year-on-year, according to supply chain services company Czarnikow Group. Exports could fall to the lowest since 2007, it said. Back-to-back droughts and the need to reserve a portion of the next cane crop for replanting mean output next season is expected to be even lower than this season, “unless there’s more rain in all growing areas from now to December,” said Sirivuthi Siamphakdee, vice chairman of Thai Sugar Millers Corp. Look at map below of deficient precipitation areas over last six months (% of normal precip) I


ndonesia surprised the market this morning and announced it would authorize the imports of up to 600,000 metric tonnes, this after giving signals late last week that it would only allow a fraction of this total.

The Pakistan Sugar Mills Association (PSMA) called on the government to authorize the import of 300,000 metric tonnes of sugar in Aug-Oct in order to build a strategic reserve and control local prices. Millers reported that stocks currently stood at 1.6 million mt, but officials noted that the stocks figures were unreliable.

GLOBAL CURRENCY UPDATE  USD: 93.635 -0.85%  BRL: 5.1928 +0.81%  INR: 74.837 +0.09%  MXN: 22.061 +1.01%

Best Regards,
Jeff Dobrydney
Senior Vice President
Head of Futures & Options
JSG Commodities
This email address is being protected from spambots. You need JavaScript enabled to view it.
203.853.3000
www.jsgcom.com

This report has been compiled for general informational purposes only. While every effort has been made to ensure accuracy, Jenkins Sugar Group, Inc. assumes no responsibility for errors and omissions.