Tuesday March 22, 2022

World sugar futures consolidated Monday’s gains today – while the BRL strengthened additionally today, trading to 4.9051 to the dollar, energy prices descended through unchanged just as the sugar session opened for the day and yesterday’s break-out related technical luster in sugar seemed to have faded. May settled 13 lower at 19.15, July six lower and the back months from one lower to 15 higher. Outright traded volume was 74,932 lots. On spread, May/July traded from 12 over to five over and last at five over. July/October traded from two under to eight under and last at seven under. May failed one point shy of Monday’s high this morning. The May futures have ranged from 19.98 to 18.51 since peaking on March 7th and settled just beneath the mid-point of the range today

Option watch: Sugar option volume was 19,373 contracts consisting of 12,202 Calls and 7,171 Puts. Volatility eased as futures remain rangebound for the session. Trades of note: 1,500 June 20.50/May 19.50 Diagonal Call Spreads trade -9/-8, 750 May 20.00 Calls vs 19.21 trade 26, 500 May 19.25 Calls trade 51, 500 June 19.50/20.75/22.00 Call Condors trade 17, 1,400 July 19.00/18.00 Put Spreads vs 19.13 trade 47, 500 July 19.50 Calls vs 19.10 trade 78-79, 500 October 20.00 Calls vs 19.16 trade 97-98, 400 October/July 17.00 Put Calendars vs 19.12/19.17 trade 17, 13.0 March 19.25 straddles trade 304-310 and 1,100 October’23 15.50 Puts vs 17.50 trade 64.

ATM Vol’s: May 19.25 Straddle 100-103 - vol 24.00, -3.0 % June 19.00 Straddle 142-146 - vol 24.20, -1.7 % July 19.00 Straddle 180-183 - vol 24.70, -1.5 % October 19.25 Straddle 245-251 - vol 23.33, -.90 % Option Open Interest: Calls 321,420 +1,915, Puts 214,063 +3,509 - total 535,483 +5,424

Brazil’s government announced on Monday it will cut import tariffs for ethanol and six food products to zero until the end of 2022. Officials from the Economy Ministry also said the tax on capital goods, computer and telecommunication products will be permanently reduced by 10%. The estimated cost of the measures is one billion reais. The food products that will have import taxes cut are ground coffee, margarine, cheese, pasta, sugar and soybean oil. The market and its participants are analyzing the potential future impact, if any, on the domestic market if imports are necessary to the extent that they impact future prices and production. Sugar production in Thailand is heading for a three-year high after an end to two years of drought-like weather conditions improved the crop to a large degree. Output may reach 10.0 million tons by the end of the current crushing season on March 31st, according to Thai Sugar Millers Corp. The mills produced 9.6 million tonnes from crushing 87.75 million tonnes of cane since the start of the harvest season on December 7 th, the group said Tuesday.

In the USMCA region: US futures trading was subdued today, leaving prices to settle unchanged from spot May through March’23 (May at 36.60) and from 15 higher to unchanged in the back months. A few lots of May traded at 36.70 and 40 lots of March traded at 34.80. Conditions remain quiet – with the #11 idling in the middle of the recent range and still 74 points below the high seen two weeks ago, buyers seem content to bide their time, hoping that USDA will act to address the current high raw sugar price by allowing additional imports. While we view an eventual increase in imports as likely, we are skeptical that anything will happen prior to mid-April and may not occur until after the May WASDE release when more is known about domestic production - as well as domestic deliveries. Any residual May #16 pricing will have to be cleaned up in the next two weeks – the futures expire on April 8th - and will have to transact in the current tight environment.

Regards,
JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000

JSG Indications: Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Raws: 36.60 36.60 35.85 34.85 34.85 34.70 Mexican peso: 20.2884 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.