The crude market gained nearly 5% up to $33.40 basis WTI, the first time above $30 in two months. The Brazilian real advanced 2.3% into 5.72 and the Dow gained 900 pts, up 4%. Sugar advanced 42 pts (+2%) during yesterday’s session.
It is unclear what percentage of sugar’s gains on Monday were related to strong macro and technical influences on the tide of improved perspectives about recovery from covid compressions, but clearly those influences were prominent. Morgan Stanley put out a report about prospects for an available vaccine as early as the fall of 2020, although in reading the report, they sited obvious obstacles in proving safety standards from side-effects in their trials by that time frame. In the meantime, however, the more relevant fundamental story for sugar remains the fact that record sugar production this early in the campaign, combined with bumper Brazilian bean and corn crops have created enough port congestion to have already resulted in rising cash prices and fundamental short-covering in nearby spreads and outrights. While there still appeared to be some commercial short-covering into Monday’s advance, the majority of buying came from macro and technical flows, along with large day trading from point-&-click shops, which explained some of the late sell-off from the highs.