Wednesday November 8, 2017

 

World sugar futures settled 12 higher in March at 14.84 and from 17 to 13 higher in the back months. Traded volume was 80,562 lots. The BRL moved to its strongest reading against the dollar for November today at 3.2416, underpinning sugar. WTI Crude languished beneath unchanged through the morning before spiking to a new recent high at $58.14 shortly after noon. These gains unraveled as sugar closed for the session, and Crude turned in a reversal on the daily chart, which may give the sugar bulls cause for concern tomorrow. On spread, March/May traded from four to eight under and last at eight under. May/July traded from four to eight under and last at five under. Technically, sugar bested the recent high at 14.84 by two points and settled right at 14.84. March posted the highest settlement for nearby sugar dating back to August 1st, and settled above the down-sloping trendline originating on that day (14.82). There was little excitement generated by these feats today – we’ll see what the morning brings, but a retracement would be snatching defeat from the jaws of a short-term technical victory.

 

Option watch: Option volume was 11,744 contracts consisting of 8,954 Calls and 2,790 Puts. Volatility was unchanged for the session. Trades of note: 350 December 14.25/14.00 Put Spreads trade 3, 1,000 January 15.00/16.00 Call Spreads trade 25 (paper sells), 500 May/January 15.00 Call Calendars vs May at 14.81 and March at 14.76 trade 40 (paper buys January), 250 January 15.00/15.50 Call Spreads trade 16, 750 March 15.00/17.50 Call Spreads vs 14.79 trade 51 (paper buys), 500 March 16.50/18.00 Call Spreads trade 13 (paper sells), 250 March 15.00/17.50 Call Spreads vs 14.72 trade 48 (paper buys) and 200 March 14.50/14.00 Put Spreads trade 21.

ATM Vol:

December 35-40 - vol 20.60, down 1.0 %

March 14.75 Straddle 137-141 - vol 22.73, unchanged

May 15.00 Straddle 165-168 - vol 21.20, unchanged

July 15.00 Straddle 180-186 - vol 19.85, unchanged

Option open interest: Calls 272,960 +3,220, Puts 166,671 +730 - total 439,631 +3,950

 

Sugar content in Russian beets has averaged 14.11 % so far during the crop, up from 13.21 % last season, according to the Institute for Agricultural Market Studies, or IKAR. As a result, sugar production may exceed 6.5 million tonnes in 2017-18. Platts/Kingsman has forecast Brazil’s 2018/19 center-south sugar production at 30.1-34.5 million tonnes, depending on the relationship between ethanol and sugar prices domestically. The estimate is down from the 36.02 million tonnes forecast for the current crop. Sugarcane crushing is seen falling to 575.0 million tonnes, down from 592.0 million tonnes this season as aging fields will reduce productivity. According to Balrampur Chini Mills, Indian sugar production is seen climbing to 25.5 million tonnes in the year that began October 1st, from 20.2 million tonnes a year earlier, on higher yields and acreage in Maharashtra and Uttar Pradesh. Sugar consumption is seen rising from 24.6 million tonnes – nearly matching production.

 

 

 

In the NAFTA region: US futures trading was quiet today – prices settled unchanged in January, and from 22 higher to five lower in the back months. Final numbers form Conadesuca for FY’17 show total exports from Mexico of 1.525 million tonnes tel quel. This was comprised of 1.016 million tonnes to the US under the Suspension Agreements (793,020 tonnes of estandar and 223,048 tonnes of refinado), 326,475 tonnes exported under the IMMEX program (112,616 tonnes of estandar and 213,859 tonnes refinado), 166,208 exported to the rest of the world and 16,188 tonnes entered under the US re-export program. WASDE numbers will be released at noon tomorrow. We will not be surprised to be see an increase in beet sugar production, reduced food use and an elevated stocks/use ratio for FY’18 as a result.

 

JSG Commodities

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203 853 3000

 

JSG Indications:

Q4’17

Q1’18

Q2’18

Q3’18

Q4’18

Q1’19

Raws: USNH:

27.30

27.30

27.25

27.25

27.00

27.00

Mexican peso to USD:

19.0752

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.

Contact Information

JSG Commodities

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Frank Jenkins
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Ken Lorenze
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Jeff Dobrydney
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Eric Bergman
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Stephen Ward
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Chris Cody
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Diana Nguyen
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