MORNING SUGAR REPORT

Friday May 28, 2021

WORLD SUGAR #11

World sugar futures have surged higher this morning on a national water shortage announcement out of Brazil, a strong BRL and steady commodities. July #11 is last 44 higher at 17.56 ,trading from 17.20 to 17.69 thus far. October is last 40 higher at 17.62. More than 60,000 lots have traded between July and October to this point. On spread, the July/October has traded from nine to two under and last at five points discount. The October/March has traded from 13 to five under and last at six points discount.

LONDON SUGAR #5

In London, August is last $8.80 higher at $466.00 trading from $459.50 up to $468.00 to this point. On spread, the August/October is down $0.10 last at $1.60 discount. The August/July white premium is last around $79.00, up $1.00 on the day.

SUGAR #11 OPEN INTEREST July 2021: 372,119 -3,691 October 2021: 232,686 +5,482 March 2022: 129,205 +2,915 Total: 1,027,612

SUGAR #11 OPTION WATCH n 17.00 straddle 102-109 vol 33.00 +1.0% q 17.50 straddle 157-164 vol 31.35 +.75% v 17.50 straddle 234-241 vol 30.90 +.55% h 17.50 straddle 310-317 vol 26.63 +.35% trades of note: 300 n 18.00 p vs 17.38 trade 92 300 n 16.00 puts live trade 6

MACRO BYTE Volatility in Brazilian markets is such a barrier to foreign investors that even surging interest rates can’t generate interest, leaving shortterm currency appreciation to be driven by locals. During the commodities boom a decade ago, foreign capital was a massive force behind the real’s glorious run. But in 2013, they abandoned those bullish bets and never looked back. Brazil’s terms of trade have surged and the country was one of the first to embark on a aggressive tightening cycle. And yet it’s still failed to convince investors that its currency is a better alternative than its most immediate peers, including the Mexican peso. “The Mexican peso is so much more attractive.” said Christian Lawrence, a strategist at Rabobank in New York. “Brazil needs to go quite a bit further to take Banxico’s crown, especially if you take liquidity into account.” Tap here to add a caption250 n 17.00 straddles vs 17.40 trade 104-105 300 q 20.00 calls live trade 17

GLOBAL FUNDAMENTALS

Cash-wise: Today’s CFTC Commitment of Traders report incorporates a period where July traded from 17.10 down to 16.54 and back to 17.27 during the reporting week, as the market continues to be supported on dips below 17.00. We believe that the supplemental spec position has gone from a 232,974-lot long to a long position of around 219,500 lots. July open interest has gone from 405,745 to 386,097. October open interest has gone from 246,799 to 249,951. Total open interest has gone from 1,037,314 to 1,021,300.

The Brazilian government will issue a water emergency alert for the period from June to September in five Brazilian states - Minas Gerais, Goiás, Mato Grosso do Sul, São Paulo and Paraná. All are in the Paraná River basin, where part of agricultural production and large hydroelectric plants are concentrated. In the region, the situation is classified as "severe" and the forecast is that there will be little rainfall for the period. It is the first warning of this nature in 111 years of meteorological services in the country. The measure corroborates the statements by President Jair Bolsonaro and the Minister of Mines and Energy, Bento Albuquerque, that Brazil is facing the biggest water crisis in recent times.The alert, obtained by the Broadcast, will be released jointly, today, by the National Meteorological System (SNM), federal agencies linked to meteorology, the National Water and Basic Sanitation Agency (ANA) and the National Monitoring Center and Natural Disaster Alert (Cemaden). In the document, the institutions reinforce that the water emergency is associated with the scarcity of precipitation in the hydrographic region and the forecast that the scenario will persist until September.

Maharashtra’s 2020-21 sugar season has come to an end, with the state producing 10.63 million metric tonnes of sugar after crushing 101.2 million tonnes of cane with a sugar recovery of 10.50%, officials of the Maharashtra Sugar Commissionerate said. Around 190 sugar mills, including 95 cooperative and 95 private mills, participated in the crushing season, operating for an average of 140 days. The state had produced a record 10.7M MT of sugar in the 2018-19 season.

GLOBAL CURRENCY UPDATE • USD: 90.202 -0.28% • BRL: 5.2202 +0.09% • INR: 73.221 -0.10% • MXN: 20.449 +0.04%

Best Regards,

Jeff Dobrydney Senior Vice President Head of Futures & Options JSG Commodities This email address is being protected from spambots. You need JavaScript enabled to view it. 203.853.3000 www.jsgcom.com

This report has been compiled for general informational purposes only. While every effort has been made to ensure accuracy, Jenkins Sugar Group, Inc. assumes no responsibility for errors and omissions