Jenkins Sugar Group Evening Report                                         

Friday January 8, 2010

World sugar futures were pressured lower to close the week, and despite attempts at a strong finish, index fund re-weighting ultimately led to a late session sell off which gave back the majority of this week’s rally.  March finished the session 47 points lower at 27.53, and fell further following settlement after the 10-day moving average was breached (27.46) down to 27.31.  May settled 45 points lower at 25.25, and also slipped a bit more to trade last at 26.08.  The deferred positions closed 61 to 89 points to the downside.  Today’s final estimated volume totaled 100,946 contracts, including over 2,000 March EFP’s.  There was also good volume on both the March and May TAS, with the positions seeing a combined 5,000 lots of action – indicative of index fund presence in the market.  After stumbling out of the gates - US Job losses were a bit higher than expected in December and the unemployment rate remained at 10%, although the November 2009 data was revised to show the US economy added jobs for the first time since the recession began two years earlier, the weaker dollar was initially unable to stimulate sugar.  Midway through the session, March found some life as specs took advantage of little resistance above and drove prices to 28.35, 35 higher in light volume.  The tables quickly turned, however, and March pulled back first to 27.77 before the close, and then eventually all the way down to 27.37 during the two-minute settlement period.  On spread, the March/May traded from 135 to 124 points premium and last at 127.  The May/July established a range from 263 to 300 points premium and last at 287 over. Today’s CFTC Commitment of Traders Report showed a net spec long position of 231,663 lots as of Tuesday’s close. The large specs liquidated 656 longs and covered 1,336 shorts, and were net long 184,440 lots. The small specs liquidated 3,074 longs and 2,494 shorts and were net long 47,223 lots. The combined report showed a net spec long of 227,272 lots. The large specs were net long 178,125 and the small specs were net long 47,147 lots. The supplemental report showed a net index fund long of 187,769 lots. According to the Indian Sugar Mills Association, mills have contracted to import 2.9 million tonnes of raw sugar and 900,000 tonnes of white sugar in the year which started October 1, and may need up to two million tonnes more of raw sugar to meet the country’s shortfall.  India is considering changing rules to allow sugar mills in Uttar Pradesh to process their imported raw sugar in other states. Thai sugar exports rose 19.5% in November from a year earlier due to strong demand from countries such as India and Indonesia.  In October, the country exported 535,537 tonnes (up 59.3% from 2008) and in November exported 381,896 tonnes.  For the year, exports are 4.2% ahead and with December’s figures will most likely finish in line with expectations.   TCSC has announced a tender to sell 254,500 metric tonnes of raw sugar on January 14^th.  In Pakistan, TCP has floated a tender to import 150,000 metric tonnes of white sugar to meet a domestic production shortfall and attempt to check rising prices.  The last date for submission of bids is February 13^th. 

In the NAFTA region: US Futures were mainly quiet for the majority of today’s session, before late action awoke the market.  March settled three points higher at 36.90, May finished 50 points lower at 36.25, while the deferred months closed unchanged to 19 points higher.  Final volume totaled 220 contracts, including good size which traded in March 2011 at 28.75.  The March/May, which has traded between 150-200 points premium, saw action at 50 over, as the May was pressured a bit lower.  The weekend outlook for Clewiston and Belle Glade, Florida forecasts low temperatures on Saturday and Sunday night around 32 degrees as another cold front is expected to whip through the state. The January WASDE will be released Tuesday, January 12^th. 

Regards,

Jenkins Sugar Group, Inc.

(203) 563 6100

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