Wednesday February 24, 2021

World sugar futures saw a further unraveling of the outright gains and the widening of the nearby premium seen on Monday. March settled 25 lower at 18.16 while May settled 16 higher and the back months from eight to 14 higher. Outright traded volume was a very pedestrian 125,923 lots. On spread, March/May contracted from 139 to 94 over and last traded at 99 over. The spread settled at 90 over on Friday. May/July traded from 72 to 65 over and last at 70 over. March/October finished today’s session at 205 over, having traded to 261 over/finished at 255 over on Monday. As stated on Monday’s rally, sugar seemed to be acting independent from its usual cohort – energy prices moved to new highs with Brent touching $67.30 prior to noon in New York and the Brazilian real appreciated additionally today.

Option watch: Option volume was 36,199 contracts consisting of 27,036 Calls and 9,163 Puts. Volatility was lower in short-dated position and unchanged to slightly higher on the back of the board. Trades of note: 1,000 May 16.00/17.50/19.50 Call Fly’s vs 17.12 trade 26, 600 May 18.00/19.00/20.00/21.00 Call Condors vs 17.17 trade 14, 500 May 16.25/18.00 Call Spreads trade 74, 250 May 19.00/20.00/21.00 Call Fly’s trade 6, 250 May 17.00 Straddles trade 193, 1,000 July 17.50 Calls trade 86-88, 1,000 July 17.00/18.50 Call Spreads vs 16.46 trade 42, 1,200 October 16.00/17.00 Call Spreads trade 32, 600 October 18.50/15.00 Fences vs 16.07 trade 6, 500 October 16.00/16.75 Call Spreads trade 24, 400 October 18.50/15.00 Fences vs 16.12 trade 3, 327 March’22 14.75 Puts vs 16.10 trade 78 and 250 October’22 12.25/July’22 15.25 2x1 Fences trade 10.

ATM Vol’s: April 17.25 Straddle 127-130 - vol 39.60, -1.2 % May 17.25 straddle 198-201 - vol 38.85, -.50 % July 16.50 Straddle 241-245 - vol 33.45, +.15 % October 16.00 straddle 268-271 - vol 28.35, unchanged Option Open Interest: Calls 293,684 +7,478, Puts 198,630 +5,736 - total 492,314 +13,214

In India, Maharashtra produced 7.97 million tonnes of sugar as of February 21st, according to the sugar commissioner. Mills have paid 82 % of the cane Fair and Remunerative Price (FRP), down from 89 % paid at the same period last year but the cane dues are 85 % higher on year because the cane crush is 93 % higher. Ex-mill sugar prices have remained stable over the last month at around INR 31.72-32.17/kg (USD 0.44/kg) in Uttar Pradesh. Uttar Pradesh has approved allowing mills to make ethanol directly from cane juice but only for fuel blending and only for integrated mills and distilleries. The government is planning to set up a 120,000-liter distillery in the Pipraich sugar mill by the end of 2021, the first plant to make ethanol directly from cane juice. In Maharashtra, mills will divert 1 million tonnes of sugar into 1.1 billion liters of ethanol, the cane commissioner said. In Brazil, the President’s nominee to become the new head of Petrobras said it was important to look at the fuel price situation in the context of the pandemic and rising costs. He warned that the higher costs would be passed down the chain. Similarly, farmers say they are struggling with rising production costs with the increasing fuel prices affecting the usage of trucks and harvesters. They complained that the price of fertilizer had doubled.

In the USMCA region: US futures trading was focused on the FY’22 positions today as refiner/end user buying cleaned up several levels of scale-up producer selling. November traded to 28.40 while the calendar 2022 positions rallied to 27.57 – new highs for the 2022 positions. Prices settled unchanged in May at 29.95, five lower in July and September, one higher in November and 19 to 20 higher in the back months. One year ago today we had the pleasure of participating in the domestic sugar market panel at the SUA colloquium in California, marking the last large-scale in-person gathering of the US sweetener industry before the Covid lock-down was imposed. The 2021 International Sweetener Colloquium will take place virtually next Tuesday and Wednesday. Details on the event can be found here.


JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000 JSG Indications: Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Raws: 29.90 30.00 29.85 28.40 27.50 27.50 Mexican peso: 20.3772 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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