As many market participants excitedly prepare for the World Cup to begin tomorrow in Brazil, it felt like the sugar markets were heading into holiday mode, trading yet another dismal session for the flat price with a high proportion of volume going towards the July/October spread. In New York, the July front month contract traded quietly, staying in a constricted 27 point range between 16.75, a new low, and 16.95, and finally ending the session near the lows at 16.81, down 16 points on the day, after trading over 70,000. The day began on a sour note, with July opening two points below last night’s settlement at the day’s highs – 16.95 – before trading lower. The market reached down into the low 16.80s, briefly touching 16.81 before making another attempt at the highs, bouncing off 16.90 before turning lower once more. The front month then dropped down to touch Friday’s lows at 16.77 before being rejected from this level. Then, near settlement, the market dove lower once again to bounce against the support at 16.77 before barely breaking through to touch as low as 16.75. The market recovered slightly, however, and ended the day in the low 16.80s. One big reason for the lifeless session traded in July today was that the vast majority of volume was dedicated to the spread, as market participants continue to roll positions out of front month. July/October traded over 50,000 lots today, which is even more massive when you consider that it was 70% of the flat price volume. Range in the spread was fairly small, though, keeping between -0.82 and -0.77, which speaks to just how liquid this spread has been on both the buy and sell side. The spread ended the day on the lower end of this range, settling at -0.81, down two points on the day. Further evidence of the massive rolling seen in the market recently can be seen in the change in open interest; July dropped even further today, losing 34,500 lots to now have only 224,000 lots open, while the lion’s share of this went to the October contract, which gained 30,000 lots to go into the session with 364,000 open. With today’s session on the spread board looking very similar to yesterday’s, we can surely expect another similar drop tomorrow. As for the flat price, there still seems to be a fairly negative sentiment on the board, which is only reinforced by today’s session. This marks the fourth session in a row that we have seen a settlement under 17.00, and it felt like yesterday’s session inability to hold over 17.00 was a big trigger for the further negative action seen today. But again, the trek lower has proven challenging, in a large part due to the big bids in the depth scale down from here. Not to sound like a broken record, but either the market needs to find the selling interest to chew through this, or needs to start finding a bid again. With the depth still very thin on the offer, the flat price could come back with a vengeance. A likely instigator for this could be a trip-up in the Brazilian harvest, which has been progressing well thus far as yesterday’s Unica report showed. But without this, the market may continue to slide. Hopefully as the focused interest on the front spread dims as we near expiry, the flat price may start to come to life again.
In London, interest dimmed somewhat today compared to what we have seen through the market earlier this week, mostly due to evaporating volumes in August/October, despite a sharp pickup in trading near the end of the session. The flat price weakened despite this, as August ended the day down 4.30 to 456.20 after trading a very small 3,500 lots. October was also weaker on the day, losing 3.90 to settle at 467.50 after trading a measly 2,200 lots. The August/October can only was fairly inactive most of the day, but traded close to 1,000 lots near the close to settle on its lows of the day at -11.30, down 30 cents on the day after trading between -11.30 and -10.10. The white premium board traded a pretty blasé session, with the front two premiums drooping slightly lower again. August/July stumbled about 50 cents lower to about 85.75, while October premiums fell about 50 cents as well to end the day at 79.00.
Global stocks were hurt today after the World Bank cut its global growth forecast. In the U.S., the Dow Jones lost 0.55% and the S&P 500 lost 0.32%. European stocks also felt the hurt as Euro Stoxx dropped 0.67% and the FTSE 100 dropped 0.53%. Asian stocks were the winners of the day, as the Nikkei 225 managed to gain 0.50%. In currencies, the Brazilian real snapped a nearly week-long rally to weaken today, devaluing 0.38% against the dollar to last trade at 2.2334. The Indian rupee fared much better, clinging to nearly unchanged levels at 59.2762. Meanwhile, despite the poor performance seen in our own market, commodities as a whole were as a majority in the green. Crude oil saw gains, with the WTI contract rising 0.18% and the Brent gaining 0.26%, while in metals gold and silver were up 0.14% and 0.27% respectively. Agricommodities were also trading higher, as corn gained 2’6 and wheat gained 6’6. The softs board also saw rallies in both coffee and cocoa, which were up 2.67% and 0.94% respectively.