In July the closing averages of the current October 2020 driver contract in New York had a low volatility behavior in their monthly closing averages for the period, in line with what had been seen in the daily quotes of this asset on the New York exchange. In general, October/20 remained solidly within a well-defined price range between 11.40 and 12.40 cents.
This range of fluctuations between highs and lows provided many traders, hedge funds, and investment banks with operations with fluctuations of just over 7%, which showed relative liquidity in the short-term market even in the face of the narrow volatility limit and close to a clear lack of capacity to react to values above 12.40 cents.
On the one hand, the New York market did not find buying strength to enter negotiations above 12.40 cents in view of the projection of strong volumes of stocks in Asia during the off-season of the 2019/20 production period, which runs until October this year. In India alone, the stocks reach 16 million tons of sugar, followed by 3.5 million tons from Thailand, and 4.5 million tons from China. After that, there is also the production from India for the 2020/21 crop, which is expected to reach 33 million tons, together with more 12 million from Thailand and 10.7 million from China.
Therefore, given the tone of strong expansion of supply in times of off-season with record stocks, few agents are venturing on this commodities segment, showing the low tone of volatility on the part of the October/20 contract during the month of July.
In this context, in July, the average closing price of the October/20 contract on the New York exchange was 11.84 cents. In comparison with the same month of the previous year, there was a decrease of 2.38% from the average of 12.13 cents. In the margin, there was a devaluation of 0.85% from the average of 11.94 cents seen in June.
Expanding the analysis scope, we can see that the average price of July this year was 14.13% below the average price for this period during the last five years, which is currently around 13.78 cents. In the previous month, current prices had been 14.74% lower than the five-year average of 14.00 cents for the period.