When we look back to September 2019, ahead of the Brazilian Sugar Dinner, the Sugar supply and demand was looking towards a deficit greater than 5 mln m/t but there were lots of uncertainties regarding Thailand (lower acreage and drought) and India (lower acreage and rain) besides the EU, Pakistan, Australia, USA, Mexico etc…

The Sugar nr 11 October contract settled at end of September just under UScts/lb 12,00 and there were mixed views on how much the market could recover towards the end of the year and into the first Quarter of 2020. The Sugar Dinner in Brazil came and went and the market stayed dull but most believed in better prices. In October we had weaker prices, but by November into December prices started to improve on more crop concerns.

Investors have played Sugar from the short side since May 2017 till January 2020 (average 49k lots) and since the 14th of January they covered all their short and started playing from the long side (average 64K lots) reaching 165k lots by the 25th February.

We started 2020 in a “wobbly” macro mood with US/Iran tensions and at one point the “world” was “thinking” we could be advancing towards war between the two nations. Well, we know what happened, nothing happened! We also had the beginning of the Coronavirus outbreak in China which was starting to spread out. Despite the wobbly

“Macro” Sugar prices continued rising reaching UScts/ lb 15,76 on 19th February. We also had a strong inverse market.

We are now in March, 6 months later and we now know that most of the expected lower crops turned out to be true and some much worse than expected like Thailand (+/- 75 mln m/t of Cane vs 131 mln m/t last crop) and India (around 26,5 mln m/t of sugar vs around 33 mln m/t the year before).

The 2019/20 April/March supply and demand estimated deficit stands at 11,7 mln m/t R.V. The deficit as of March 2020 is being dealt with on crop export- supply and demand-stocking like India and Thailand, so until now, we have not run out of Sugar and are not going to as crops are rolling in.

What we are having to plan for is the fact that unless the next crops improve like Brazil, India, Thailand etc… we will have another large deficit to deal with in 2020/21. Most of the deficit we had in 2019/20 was caused by poor weather (too much or too little rain depending on the country) and to a lesser extent economic factors (low prices = low care = lower acreage in some countries).

20 | ADMISI - The Ghost In The Machine | Q1 Edition

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24