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The market has been in a consolidation mode for the past three weeks and has inched to the higher end of this range in the past few days. While there are plenty of bearish supply/demand forces at work, outside market forces appear to be turning more positive, and we remain concerned that index funds will be more active buyers over the short term. A weakening US dollar, record high gold prices, massive world liquidity, and the strength in the energy sector are all positive forces for sugar. May sugar closed moderately lower on the session yesterday, while October closed just a few points lower on the day. Talk of an improving supply outlook helped to pressure the nearby futures. The market is still inverted due to tight current supply, but traders believe it will eventually dissipate. This has sparked some active bear spreading. Mexico’s sugar production is expected to reach 5.3 million tonnes for the 2010/11 season. Syria is tendering to buy 30,000 tonnes of white sugar. For the first six months of the October/September marketing year, China’s sugar production has reached 9.8 million tonnes, down 5% from last year. Traders believe China will import at least 2 million tonnes in the next year. Friday’s COT reports showed commodity index traders held a net long position of 181,484 contracts, up 10,096 in just one week. The buying trend of the fund traders is a positive short term force. Keep in mind that in May 2008, index funds held a net long of more than 390,000 contracts, so there is a potential for aggressive buying ahead.
TODAY’S GUIDANCE: The big picture supply fundamentals still look negative for the coming season, but the market is seeing firm buying from index funds, rising open interest and an inflationary tilt to commodity markets. At least for the short term, look for more of a bounce.
TODAY’S MARKET IDEAS: October sugar close-in support is at 24.29 with 25.55 as resistance. Look for choppy to higher trade over the near term. A close through resistance would suggest a challenge of the February highs.
Sugar: In the Short Term, Look For a Bounce
by Terry Roggensack on April 6, 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 has been in a consolidation mode for the past three weeks and has inched to the higher end of this range in the past few days. While there are plenty of bearish supply/demand forces at work, outside market forces appear to be turning more positive, and we remain concerned that index funds will be more active buyers over the short term. A weakening US dollar, record high gold prices, massive world liquidity, and the strength in the energy sector are all positive forces for sugar. May sugar closed moderately lower on the session yesterday, while October closed just a few points lower on the day. Talk of an improving supply outlook helped to pressure the nearby futures. The market is still inverted due to tight current supply, but traders believe it will eventually dissipate. This has sparked some active bear spreading. Mexico’s sugar production is expected to reach 5.3 million tonnes for the 2010/11 season. Syria is tendering to buy 30,000 tonnes of white sugar. For the first six months of the October/September marketing year, China’s sugar production has reached 9.8 million tonnes, down 5% from last year. Traders believe China will import at least 2 million tonnes in the next year. Friday’s COT reports showed commodity index traders held a net long position of 181,484 contracts, up 10,096 in just one week. The buying trend of the fund traders is a positive short term force. Keep in mind that in May 2008, index funds held a net long of more than 390,000 contracts, so there is a potential for aggressive buying ahead.
TODAY’S GUIDANCE: The big picture supply fundamentals still look negative for the coming season, but the market is seeing firm buying from index funds, rising open interest and an inflationary tilt to commodity markets. At least for the short term, look for more of a bounce.
TODAY’S MARKET IDEAS: October sugar close-in support is at 24.29 with 25.55 as resistance. Look for choppy to higher trade over the near term. A close through resistance would suggest a challenge of the February highs.
Tags: Softs, Sugar
About Terry Roggensack