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While the fundamental setup for the first quarter looks supportive, the hefty net long position held by speculators and weakness in outside market forces appear to be enough to see a more serious downside correction. As of December 28th, the COT report showed that together, non-commercial and nonreportable traders held a net long position of 202,468 contracts. The market closed sharply lower on the session yesterday with a 310 point range, keeping volatility as a front-burner issue into early this year. While the range appeared wide, trade stayed inside of the 485 point range from December 30th. The Brazil center-south cane harvest season appears to be mostly complete, according to officials there. They expect the cane harvest for the 2010/11 season to end up less than 560 million tonnes. This is down from their August forecast of 570.2 million, and that was down from their estimates when the season started. The region had crushed 552.5 million tonnes by December 16th, which was up 7.2% from last year. Sugar production reached 33.4 million tonnes, up 19.5% from last year. Weakness in the energy and metal markets plus a turn higher in the US dollar may have helped spark the selling. India is beginning to export sugar on the world market, but these supplies are badly needed, as Australian exports are expected to drop 25% from earlier expectations due to flooding. The recent floods are occurring after the harvest, so they should not have too much of an impact on the current crop, but it may not be good for next year’s harvest. For the key China sugar producing region (which represents nearly 70% of total), production for the first three months of the 2010/11 season has reached just 2 million tonnes, down 11.4% from last year’s pace.
TODAY’S GUIDANCE: While the fundamentals look supportive, the technical action is weak and the market remains in an overbought condition. Close-in support for March sugar comes in at 30.03 and 28.92 with 32.13 and 32.76 as resistance.
TODAY’S MARKET IDEAS: With a bearish set-up for outside markets today, new buyers may want to wait to see how far the liquidation selling takes the market down.
Sugar Market Commentary – 2011.01.05
by Terry Roggensack on January 5, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
While the fundamental setup for the first quarter looks supportive, the hefty net long position held by speculators and weakness in outside market forces appear to be enough to see a more serious downside correction. As of December 28th, the COT report showed that together, non-commercial and nonreportable traders held a net long position of 202,468 contracts. The market closed sharply lower on the session yesterday with a 310 point range, keeping volatility as a front-burner issue into early this year. While the range appeared wide, trade stayed inside of the 485 point range from December 30th. The Brazil center-south cane harvest season appears to be mostly complete, according to officials there. They expect the cane harvest for the 2010/11 season to end up less than 560 million tonnes. This is down from their August forecast of 570.2 million, and that was down from their estimates when the season started. The region had crushed 552.5 million tonnes by December 16th, which was up 7.2% from last year. Sugar production reached 33.4 million tonnes, up 19.5% from last year. Weakness in the energy and metal markets plus a turn higher in the US dollar may have helped spark the selling. India is beginning to export sugar on the world market, but these supplies are badly needed, as Australian exports are expected to drop 25% from earlier expectations due to flooding. The recent floods are occurring after the harvest, so they should not have too much of an impact on the current crop, but it may not be good for next year’s harvest. For the key China sugar producing region (which represents nearly 70% of total), production for the first three months of the 2010/11 season has reached just 2 million tonnes, down 11.4% from last year’s pace.
TODAY’S GUIDANCE: While the fundamentals look supportive, the technical action is weak and the market remains in an overbought condition. Close-in support for March sugar comes in at 30.03 and 28.92 with 32.13 and 32.76 as resistance.
TODAY’S MARKET IDEAS: With a bearish set-up for outside markets today, new buyers may want to wait to see how far the liquidation selling takes the market down.
Tags: Softs, Sugar
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