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It has been a while since the sugar market showed the type of strength it did yesterday. Traders will be interested in seeing whether there is much demand on this rally, as buyers are aware of higher production coming from Brazil and India and a surprise, record crop from Thailand. The market managed a significant range-up extension yesterday and penetrated a downtrend channel resistance line that was forged off the March-May slide in prices, which was seen as a bullish technical development. Outside market forces look positive today with a turn down in the US dollar and more strength in the metals markets. The number of vessels waiting to load sugar in Brazil has increased, as the harvest has not picked up as much steam as some traders had hoped. A general perception that Brazil’s production may be revised lower due to poor early yields might be adding to the positive tone. Australia is expected to start their 2011 crush season about 4 weeks earlier than normal. The idea that the world production surplus could be significant this season has been a primary negative force for the sugar market. China’s production jumped 53% for April. This pushed January-April production to 7.82 million tonnes, up 1.4% from last year.
TODAY’S GUIDANCE: The market is seeing a recovery bounce from an oversold condition, but for now the fundamentals do not suggest a turn in the trend is imminent. Look for a recovery bounce and not much more.
Sugar: Look for a Recovery Bounce and Not Much More
by Terry Roggensack on May 11, 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!
It has been a while since the sugar market showed the type of strength it did yesterday. Traders will be interested in seeing whether there is much demand on this rally, as buyers are aware of higher production coming from Brazil and India and a surprise, record crop from Thailand. The market managed a significant range-up extension yesterday and penetrated a downtrend channel resistance line that was forged off the March-May slide in prices, which was seen as a bullish technical development. Outside market forces look positive today with a turn down in the US dollar and more strength in the metals markets. The number of vessels waiting to load sugar in Brazil has increased, as the harvest has not picked up as much steam as some traders had hoped. A general perception that Brazil’s production may be revised lower due to poor early yields might be adding to the positive tone. Australia is expected to start their 2011 crush season about 4 weeks earlier than normal. The idea that the world production surplus could be significant this season has been a primary negative force for the sugar market. China’s production jumped 53% for April. This pushed January-April production to 7.82 million tonnes, up 1.4% from last year.
TODAY’S GUIDANCE: The market is seeing a recovery bounce from an oversold condition, but for now the fundamentals do not suggest a turn in the trend is imminent. Look for a recovery bounce and not much more.
Tags: Softs, Sugar
About Terry Roggensack