Print
Monday July 27, 2020

World Sugar Futures turned in quite the session to begin the week by rallying 5.5% in volume that the market has not seen trade in weeks. The market was spurred aggressively higher by mainly sugar-based fundamentals, a rarity these days, while the macro picture assisted as well. The US Dollar fell to two-year lows today as Washington prepares the next stimulus package to provide economic relief. Sugar-wise there was import news from Indonesia and China and yet another Thailand crop downgrade. Market chatter was rampant following weeks of nearly none. October sugar closed 63 points higher at 12.12, trading as high as 12.19, post-close. March finished 54 points to the upside at 12.72. The volume was massive with 202,807 contracts changing hands. Last week, the average session produced less than 70,000 lots. The spread activity was noteworthy early and set the tone for the remainder of the session – October/March rallied from 69 to 57 under and saw 33,336 spreads trade, the most ever for these contracts. The March/May traded from 13 to 26 over and last at 25 points premium. Technically, tomorrow could be a very important day and particularly on the open. On a continuation chart, 12.29 represents the recent high, while the 200-day moving average stands at 12.38, having not been tested above since March. Then, the 50% retracement from the large move of the year 15.90 to 9.05 stands at 12.47. We see very little in resistance above these levels, until perhaps the likely Indian-based hedging that would enter around 13.50. Conservatively speaking, the specs added 20,000 lots of longs to their position today.

Option watch: Option volume was 24,532 contracts consisting of 17,248 Calls and 7,284 Puts. Volatility was higher on short dated and unchanged throughout the back of the board. The largest trade of the session: paper sells two October calls and buys one March call, a few thousand of these traded last week as well.

Trades of note:  500 September 13.00 Calls vs 12.12 trades 8-9  350 October11.50/ September 11.75 Diagonal put spreads trade 8  1,000 October 12.50/ March 13.00 2x1 Call spreads vs 11.94/12.55 trades 17  650 October 11.50 Puts vs 12.10 trades 26  500 October 12.00/12.50/13.00/13.50 Call Condors trade  750 January 12.75 calls vs 12.44 trades 62  400 March 12.75 Calls vs 12.70 trades 90  300 March 13.25/14.25 Call spreads vs 12.73 trades 29  250 March 14.00/11.50 fence trades Flat  500 october21 11.00 Puts vs 12.18 trades 50

ATM Vol’s:  September 12.25 Straddle 65-69 vol 27.10 +.55%  October 12.25 Straddle 100-102 vol 27.45 +.20%  January 12.75 Straddle 152-157 vol 24.25 +.25%  March 12.75 straddle 152-159 vol 24.30 unchanged  May 12.50 Straddle 188-195 vol 22.30 unchanged

Option open interest:  Calls 282,881 +1,524  Puts 228,011 +1,506  Total; 510,892 +3,030

Cash-wise: Indonesia 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. There were quite a bit of rumors surrounding Chinese buying today, from a larger import quota than previously thought, to an outright large scale purchase from a large global refiner. Nothing has been made official, but the way the market responded today and the Chinese purchases of soybeans in recent days – the situation needs to be clarified. 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.

In the USMCA region: US Futures were mainly quiet today to begin the week as the nearby contracts remain steady. September closed unchanged at 27.00 and saw very little on offer while November finished at 27.00 as well and saw its best offer at 27.25 during the session. There was some mixed buying in January and March which now have both also approaching 27.00.

Best Regards,

Jeff Dobrydney
JSG Commodities
This email address is being protected from spambots. You need JavaScript enabled to view it.
203.853.3000

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.

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries