Wednesday March 31, 2021

World sugar futures limped to the Q1 finish line. May settled 15 lower at 14.77 and the back months from nine lower to one higher. Outright traded volume was 150,683 lots. On spread, May/July traded from seven over to three under and last traded at par. May/July last traded at a discount 11 months ago as the market realized its Covid-era lows. July/October traded from two over to two under and last at one under.

As recently as February 22 nd , sugar was up 21.2 % year to date and was amongst the best performers in the commodity space. Today the nearby May settled at 14.77, down 4.65 % on the year, undermined by a flagging Brazilian real and the recent collapse in ethanol prices in Brazil as Covid cases have surged, forcing renewed lockdowns. Energy prices more broadly have been supportive – Brent Crude is up 22.7 % year to date – but have weighed on sentiment of late, dropping by 8.2 % since March 12th . The BRL finished 2020 at 5.1985 to the dollar and has since depreciated 8.37 % to 5.6337 this afternoon. From the déjà vu department: last year, nearby sugar peaked on February 12th at 15.90 (up 18.5 % year to date) and closed out the quarter at 10.42 – down 22.35 % for Q1 as Brazilian mills turned the dials to “maximum sugar”. The low for the year was posted in late April at 9.05.

Option watch: Option volume was 21,408 contracts consisting of 11,574 Calls and 9,834 Puts. Volatility ended the session lower, but we did see paper buying live Calls and Call Spreads throughout the day. Trades of note: 1,200 May 1750/15.25 Fences vs 14.88 trade 53, 750 May 15.00/14.50 Put Spreads trade 24-25, 450 May 17.75/14.25 Put Spreads trade 18-20, 400 May 15.00 Puts trade 40, 350 May 16.00/June 14.25 1x2 Put Spreads vs 14.85/14.81 trade 72-73, 1,000 July 17.00/13.75 Strangles vs 14.82 trade 38-39, 700 July 16.50/14.00 Fences vs 14.88 trade 1, 400 July 15.00/16.00 Call Spreads vs 14.81 trade 26, 1,000 October 16.00/17.00 Call Spreads trade 18 and 300 October 12.50 Puts trade 10. ATM Vol’s: May 14.75 Straddle 57-60 - vol 26.00, -2.3 % June 14.75 Straddle 99-103 - vol 24.75, -1.2 % July 14.75 Straddle 129-132 - vol 24.85, -.70 % October 14.75 Straddle 175-179 - vol 22.55, -.40 % March 15.00 Straddle 224-229 - vol 20.20, unchanged Option Open Interest: Calls 328,559 -494, Puts 243,931 -78 - total 572,490 -572 Pakistan announced today that it would resume trade with India, lifting a 19-month ban.

Pakistan’s Economic Coordination Council announced that it would allow the private sector to import 500,000 tonnes of white sugar from India, according to Reuters. In Brazil, in the week ended March 27th the retail price of hydrous ethanol dropped by 2.8 %, compared to a 0.73 % drop for gasoline, bringing the price parity to 73.3 %, according to ANP data. Ex-mill hydrous prices dropped by 15.84 % in Sao Paulo in the same period, according to Cepea/Esalq, while anhydrous fell by 15.9 %. This is the steepest fall since the season started, it said, because distributors are delaying purchases and working through their stocks. As of mid-March, Brazil’s center-south had 2.88 billion liters of ethanol in stock, up 4.4 % on year, according to the agriculture ministry. Hydrous stocks were up eight percent at 1.64 billion liters while anhydrous stocks were almost unchanged.

In the USMCA region: US futures trading was quiet today – May saw light traffic at 31.00 and January saw the same at 29.20. Prices settled 10 lower in May at 30.95, five higher in July and unchanged across the back months. The USDA released planting intentions reporting today for an array of commodities. For US beet sugar, area expected to be planted to beets was 1.169 million acres, up .58 % from last year (USDA rounds in their tables). Looking at the four largest producing states Idaho is expected to be up0.58 %; Michigan is expected to be down 1.27 %; Minnesota (by far the greatest area – 37.6 % of the total) up 1.85 %; and North Dakota up 0.9 %.

Regards,

JSG Commodities
This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000 JSG Indications: Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Raws: 31.00 30.95 29.20 28.00 28.00 28.00 Mexican peso: 20.4352 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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