Friday November 19, 2021

World sugar futures finished the week by following through on Thursday’s downside retracement. March settled 19 lower at 19.99, May 16 lower and the back months from 10 to three lower. Outright traded volume was 66,036 lots. On spread, March/May has traded from 31 to 25 over and last at 27 over. May/July traded from 41 to 34 over and last at 36 over. While sugar #11 carved out an impressive range this week, dropping to 19.64 on Monday and rallying to touch 20.69 yesterday, March actually settled two lower on the week, and is just five points higher from the November 5th settlement. Interestingly, a ~1,000 lot gust of buying lifted March #11 to 20.17 in the session’s final minute, and the last print in March was 20.11. Spot WTI Crude lost more than 4.5 % today’s basis the $75.37 low and was down more than 7.5 % on the week.

Option watch: Sugar options turned in an active session with 37,832 contracts changing hands. Volume consisted of 24,902 Calls and 12,930 Puts. Volatility in January continued its downward trajectory while the balance of the board held unchanged. Trades of note: 1,000 March 21.00/23.50 1x2 Call Spreads vs January 21.00/19.00 Strangle vs 20.20 trade 4, 1,000 January 23.50 Calls trade 2, 809 January 20.00 Straddles trade 85-90, 700 January 20.00/19.50 Put Spreads vs 20.08 trade 21-22, 500 January 19.00 Puts trade 8, 3,000 March 18.00 Puts trade 15-18, 1,650 March 21.00/23.00 1x2 Call Spreads vs 18.25 Put vs 20.10 trade 2, 1,000 March 21.00/22.00 Call Spreads trade 25, 981 March 21.00/23.00 Call Spreads trade 36-40, 500 May 23.00 Calls trade 36, 500 May 26.00 Calls trade 16 and 400 October 16.25/23.00 Fences vs March 23.00 Calls trade 3.

ATM Vol’s: January 20.00 Straddle 86-87 - vol 20.05, -.90 % March 20.00 Straddle 183-186 - vol 23.40, unchanged May 19.75 Straddle 232-238- vol 23.15, +.20 % July 19.25 Straddle 261-268 - vol 22.70, unchanged Option Open Interest: Calls 350,289 +1,399, Puts 230,773 +3,839 - total 581,062 +3,839

The ex-mill price of crystal sugar in Sao Paulo increased by 0.41 % in the week ended November 12th, having reached a new nominal record of BRL 155.73/50kg on November 12th, Cepea/Esalq data showed. China imported 810,000 tonnes of sugar in October, down from 870,000 tonnes in September and down 8.3 % from a year earlier, customs data showed. Jan-Oct imports stand at 4.64 million tonnes, down 27.2 % on year. Czarnikow said China’s sugar consumption could reach 20.0 million tonnes per year in the next decade, as it highlighted that per capita consumption in rural areas was still low. The spot price of new crop sugar is above CNY 6,000/tonne (USD 941/tonne), according to local sources. Mills in Guangxi and Yunnan delayed the start of the harvest which, combined with a 40 % drop in beet sugar output, is slowing the supply of fresh sugar at a time of good demand. Rising world sugar prices should also provide more room for domestic prices to move more to the upside, an analyst said.

This afternoon’s CFTC Commitment of Traders supplemental report showed a net spec long position, excluding the index position, of 189,594 lots as of Tuesday’s close. The large specs were net long 139,095 after adding 12,077 new longs and covering 3,367 shorts. The small specs were net long 50,499 lots after liquidating 1,395 longs and covering 1,711 shorts. The report showed a net Index Fund long of 191,771 lots after the addition of 1,450 new longs and 632 new shorts. The futures only report showed a net commercial short of 276,185 lots. The combined futures and options report showed a net commercial short of 279,335 lots. The commercials liquidated 9,954 longs and added 11,221 new shorts on the week.

In the USMCA region: US futures were again untraded and settled unchanged across the board, with January at 37.45. In the recently released USDA/FAS World Sugar Market report, USDA took pains to note that “Philippine sugar production is estimated slightly lower to 2.1 million tons due to expected lower sugar recovery. With lower production expected, the Sugar Regulatory Administration (SRA) allocated 100 percent of the production to the domestic markets as specified in Sugar Order No.1 on August 31, 2021. Because of the SRA allocation, exports (including those to the United States under the raw sugar tariff rate quota) are expected to drop to zero.” The TRQ shortfall estimate in the November WASDE of 251,000 tons assumes no Philippine shipments. Assuming that this is still the case when the WASDE is published in December and The Target Quantity of US Needs is sized up using the 13.5 % stocks/use ratio (and Mexico’s Export Limit is adjusted to 80 % of the Target Quantity), Mexico will benefit from the large shortfall estimate. If the Philippines did eventually want to ship to the US, it would potentially lift the stocks/use ratio above 13.5 %. A tangled web to be sure.

Please take a moment to register for the JSG New Yok Sugar Conference. The event is scheduled for the afternoon of December 16th .

To register, simply click here.

Regards,

JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000 JSG Indications: Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Raws: 38.00 37.30 37.10 37.10 34.90 32.65 Mexican peso: 20.8558 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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