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After a dramatic plunge the past few sessions, the market looks to see at least a recovery bounce today. While there are still difficult tasks ahead for Japan, there appears to be a general sense that the situation is controllable, and the long liquidation trend in the commodity markets has slowed. May sugar collapsed to close 214 lower on the session yesterday, down to its lowest level since early December. A general need for cash by Japanese firms combined with a desire on the part of traders to move to the sidelines and out of riskier investments like commodity markets helped spark aggressive long liquidation selling from speculators. Open interest slipped to its lowest level since mid-December, as a technically oriented selling and lack of fresh fundamental news appeared to be the focus. Talk of a larger Brazilian crop this year added to the negative tone. Chinese producers plan to plant a little less sugar this coming season, but weather will be a much bigger indication of supply after several years of poor yield. China looks to produce about 2 million tonnes less than it will use this season, and it may need to import the balance, possibly more if the government wishes to expand its strategic reserves. Mexico’s sugar production through March 12th reached 3.37 million tonnes for the 2010/11 season, which is up 26% from last year. They are expected to produce 5.2-5.3 million tonnes this season versus 4.8 million last year. Ukraine’s production for the coming season is expected to reach 2.1 million tonnes, up last year’s drought-stricken 1.5 million. Good Brazilian weather and ideas that India may be a more willing exporter in the future also helped pressure the market. Traders believe that Japan may need to increase its imports this year.
TODAY’S GUIDANCE: The market looks to see at least a recovery bounce today, but a resumption of the uptrend may not be in the cards. A better supply outlook and concerns that producers around the world have expanded after high prices last year is probably enough to cause a continued long liquidation trend from speculators, who still held a net long position of 216,710 contracts as of March 8th.
TODAY’S MARKET IDEAS: May sugar support today comes in near 26.00 with 27.60 as first good resistance. Look for bounce to resistance but not much more.
Sugar: Recovery Bounce Likely but Uptrend Resumption Not Likely
by Terry Roggensack on March 16, 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!
After a dramatic plunge the past few sessions, the market looks to see at least a recovery bounce today. While there are still difficult tasks ahead for Japan, there appears to be a general sense that the situation is controllable, and the long liquidation trend in the commodity markets has slowed. May sugar collapsed to close 214 lower on the session yesterday, down to its lowest level since early December. A general need for cash by Japanese firms combined with a desire on the part of traders to move to the sidelines and out of riskier investments like commodity markets helped spark aggressive long liquidation selling from speculators. Open interest slipped to its lowest level since mid-December, as a technically oriented selling and lack of fresh fundamental news appeared to be the focus. Talk of a larger Brazilian crop this year added to the negative tone. Chinese producers plan to plant a little less sugar this coming season, but weather will be a much bigger indication of supply after several years of poor yield. China looks to produce about 2 million tonnes less than it will use this season, and it may need to import the balance, possibly more if the government wishes to expand its strategic reserves. Mexico’s sugar production through March 12th reached 3.37 million tonnes for the 2010/11 season, which is up 26% from last year. They are expected to produce 5.2-5.3 million tonnes this season versus 4.8 million last year. Ukraine’s production for the coming season is expected to reach 2.1 million tonnes, up last year’s drought-stricken 1.5 million. Good Brazilian weather and ideas that India may be a more willing exporter in the future also helped pressure the market. Traders believe that Japan may need to increase its imports this year.
TODAY’S GUIDANCE: The market looks to see at least a recovery bounce today, but a resumption of the uptrend may not be in the cards. A better supply outlook and concerns that producers around the world have expanded after high prices last year is probably enough to cause a continued long liquidation trend from speculators, who still held a net long position of 216,710 contracts as of March 8th.
TODAY’S MARKET IDEAS: May sugar support today comes in near 26.00 with 27.60 as first good resistance. Look for bounce to resistance but not much more.
Tags: Softs, Sugar
About Terry Roggensack