Thursday January 13, 2022

World sugar futures rallied from Monday’s 17.60 low to a high of 18.47 at Wednesday’s high, and gave back a bit more than half of that at today’s lows and a bit less than half based on settlement. March settled 25 lower at 18.09, May 21 lower and the back months from 19 lower to unchanged. Outright traded volume was 105,152 lots. On spread, March/May traded from 27 to 20 over and last at 21. May/July narrowed from 20 to 14 over and last traded at 15. WTI Crude turned in an inside day, consolidating the recent considerable gains (10.5 % in January basis Wednesday’s high). The BRL posted a new near-term high against the dollar at 5.5009 before easing/consolidating.

Option watch: Option volume was 27,964 contracts consisting of 20,040 Calls and 7,924 Puts. Volatility sold off across the board. We feel it is a good time to take a look at vol’s and start to scale in. Trades of note: 1,250 March 19.00/19.50 Call Spreads trade 7, 1,000 March 17.75 Puts vs 18.07 trade 28, 550 March 20.00/21.00 Call Spreads trade 7, 500 March 20.00 Calls live trade 7-8, 250 March/May 17.00 Call Calendars trade 6, 1,000 May 19.50 Calls vs 17.84 trade 32, 439 May 16.00/17.00/24.00/27.00 Iron Condors trade 26, 400 May 25.00 Calls trade 1, 2,000 July 23.00/25.00 Call Spreads trade 7-8, 600 July 20.00/21.00 Call Spreads trade 12-14, 600 July 24.00 Calls trade 9-10 and 1,000 October 11.50 Puts trade 1.

ATM Vols: March 18.00 Straddle 87-89 - vol 19.95, -2.0 % April 18.00 Straddle 122-125 - vol 20.95, -1.4 % May 18.00 Straddle 155-160 - vol 21.50, -1.0 % July 17.75 Straddle 196-202 - vol 21.80, -.55 % Option Open Interest: Calls 360,453 -754, Puts 260,298 +866, Total: 620,751 +866

According to Williams SA the Brazilian line-up of raw sugar vessels waiting to load is now 1.036 million tonnes of sugar, which compares with 679,074 tonnes last week and 930,505 tonnes last year. Approximately 75,000 tonnes of sugar shipped on the week. New nominations include 42,460 tonnes to Algeria and 42,500 tonnes to the Black Sea. Petrobras announced it was increasing gasoline prices by 4.85 % effective January 12th. The Brazilian Association of Fuel Importers (Abicom) said this wasn’t enough to close the gap with world prices. According to Unica, Brazil’s center-south mills are unlikely to have an early start to the 2022-23 sugar season, despite a good amount of recent rain, as it will take longer for sugarcane to develop and be available for crushing, Unica projects that cane crushing in the center-south region in Brazil between January and March will reach only around 4.0 million tonnes, or more than 50 % less than reported in the same period last year. The Federation of Thai Industries expects the country will process 85.0- 90.0 million tonnes of cane in 2021/22 to produce 9.0-10.0 million tonnes of sugar, lower than the Thai Sugar Mills Association forecast of 100.0 million tonnes of cane.

In the USMCA region: US futures settled unchanged in March at 35.45 and unchanged to one lower elsewhere today following an uneventful session. While we tend to focus on raw sugar vessels when discussing the impact of high-tier imports on the market, USDA Foreign Ag Service data for October and November shows that high-duty imports were entered at no less than 23 different US ports in the first two months of the year. While Savannah, GA. saw 29,484 tonnes entered between October and November, Seattle, WA. was the only other port to average more than 1,000 tons per month during the period. During the period, sugar from a staggering 32 different origins was entered int the US paying the high-tier duty, with only Brazil (33,931 tonnes) and Guatemala (3,369 tonnes) averaging more than 1,000 tonnes per month. This has clearly become a cottage industry. While the world white sugar premium has blossomed recently, lower world raw sugar prices will do nothing to discourage these high-duty imports. A total of 90,517 short tons entered the US paying the high-tier duty in October-December.


JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. (203) 853 3000 JSG Indications: Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Raws: 36.00 36.25 36.75 35.50 33.30 33.30 Mexican peso: 20.3443 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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