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The market appears to be in the process of forming a near term low, but the trade sees higher production from Brazil for the coming season as an obstacle to higher prices. Unlike buyers in other food commodities, sugar buyers have been quiet over the past few weeks, apparently waiting for better prices to extend their coverage. Beginning stocks for the 2011/12 season are historically tight, but many traders see a world production surplus for the coming season. Many countries have expanded production following the high prices last year. March sugar closed sharply higher yesterday, reversing a recent trend toward higher trade early and long liquidation selling late. The market was higher early in the day yesterday, and it found additional buying support when energy markets turned up and the US dollar turned down. Ideas of higher interest rates ahead supported commodity markets in London, and New York sugar followed London higher. Mexico appears to have recovered from two years of poor crops. Their production through February 12th totaled 523,678 tonnes, up 29% from last year’s pace. They expect to reach 5.3 million tonnes for the season. Indian officials will consider allowing 500,000 tonnes of white sugar exports today, and given the slight reduction in inflationary pressure in recent weeks, some increase in exports of sugar appears possible. But keep in mind that India has also been very reluctant to export wheat or rice, even with hefty stocks. China is expected to see a significant production deficit this year of at least 2 million tonnes. Refined sugar production for 2010 was just 11.05 million tonnes, down 15.9% from the previous year.
TODAY’S GUIDANCE: The market remains somewhat vulnerable to long liquidation selling, but after recent sharp sell off from the highs, any further declines may require some bearish outside market influences. It is more likely that commercial buyers will emerge on this break to support a short term recovery.
TODAY’S MARKET IDEAS: Short term support for March sugar comes in at 31.11, with 32.29 and 33.01 as resistance. October sugar may be forging a near term low. Close in support is at 24.61, with 25.91 and 26.30 as resistance.
Sugar: Vulnerable to Selling; More Likely Commercial Buying on Break
by Terry Roggensack on February 17, 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!
The market appears to be in the process of forming a near term low, but the trade sees higher production from Brazil for the coming season as an obstacle to higher prices. Unlike buyers in other food commodities, sugar buyers have been quiet over the past few weeks, apparently waiting for better prices to extend their coverage. Beginning stocks for the 2011/12 season are historically tight, but many traders see a world production surplus for the coming season. Many countries have expanded production following the high prices last year. March sugar closed sharply higher yesterday, reversing a recent trend toward higher trade early and long liquidation selling late. The market was higher early in the day yesterday, and it found additional buying support when energy markets turned up and the US dollar turned down. Ideas of higher interest rates ahead supported commodity markets in London, and New York sugar followed London higher. Mexico appears to have recovered from two years of poor crops. Their production through February 12th totaled 523,678 tonnes, up 29% from last year’s pace. They expect to reach 5.3 million tonnes for the season. Indian officials will consider allowing 500,000 tonnes of white sugar exports today, and given the slight reduction in inflationary pressure in recent weeks, some increase in exports of sugar appears possible. But keep in mind that India has also been very reluctant to export wheat or rice, even with hefty stocks. China is expected to see a significant production deficit this year of at least 2 million tonnes. Refined sugar production for 2010 was just 11.05 million tonnes, down 15.9% from the previous year.
TODAY’S GUIDANCE: The market remains somewhat vulnerable to long liquidation selling, but after recent sharp sell off from the highs, any further declines may require some bearish outside market influences. It is more likely that commercial buyers will emerge on this break to support a short term recovery.
TODAY’S MARKET IDEAS: Short term support for March sugar comes in at 31.11, with 32.29 and 33.01 as resistance. October sugar may be forging a near term low. Close in support is at 24.61, with 25.91 and 26.30 as resistance.
Tags: Softs, Sugar
About Terry Roggensack