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The sugar market remains in a minor uptrend, with the rally yesterday challenging the 1-months highs. A positive tilt to the outside markets this morning might provide some underlying support, but sugar seems to have corrected its oversold condition and may turn down at any time. Bullish traders seem to be hoping for wet weather in Brazil or increased demand from China or increased import needs from the EU to help boost prices, but these would be short term influences, and the big picture supply fundamentals remain mostly negative. Weather in Brazil is dry and this might be seen as negative. The EU is expected to decide soon on additional duty-free import tariffs for near 200,000 tonnes. While China demand appears strong this year, there are strong rumors that the government may sell near 300,000 tonnes from reserves near the end of May or early June. July sugar closed sharply higher on the session yesterday and to the highest close since May 18th. A bullish tone for energy markets and surging silver and gold values helped support. Ideas that China’s demand could be strong coupled with some short-covering added to the positive tone. Mexico approved a sugar import quota of 150,000 tonnes until the end of this year. Production has reached 4.98 million tonnes so far this season, up 11.5% from last year. Brazil’s 2nd largest sugar port is believed to have expanded capacity this year, which could mean shorter loading lines. Bangladesh is expected to buy 50,000 tonnes of white sugar on the world market.
TODAY’S GUIDANCE: The International Sugar Organization believes there will be a world production surplus of 3 million tonnes for the 2011/12 season, which would be up from a surplus of 800,000 tonnes for the 2010/11 season. Many private companies have even larger surpluses in their forecast models. Resistance for July sugar comes in at 23.17 and 23.83 with some light support at 22.52 today. Better support is at 21.98.
TODAY’S MARKET IDEAS: Position traders might wait to see the extent of the recovery bounce. We see an eventual move back down to 19.43 but would not rule out a bounce to 23.17 or higher first.
Sugar: Big Increases Forecast for World Surplus for 2011/12
by Terry Roggensack on May 26, 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 sugar market remains in a minor uptrend, with the rally yesterday challenging the 1-months highs. A positive tilt to the outside markets this morning might provide some underlying support, but sugar seems to have corrected its oversold condition and may turn down at any time. Bullish traders seem to be hoping for wet weather in Brazil or increased demand from China or increased import needs from the EU to help boost prices, but these would be short term influences, and the big picture supply fundamentals remain mostly negative. Weather in Brazil is dry and this might be seen as negative. The EU is expected to decide soon on additional duty-free import tariffs for near 200,000 tonnes. While China demand appears strong this year, there are strong rumors that the government may sell near 300,000 tonnes from reserves near the end of May or early June. July sugar closed sharply higher on the session yesterday and to the highest close since May 18th. A bullish tone for energy markets and surging silver and gold values helped support. Ideas that China’s demand could be strong coupled with some short-covering added to the positive tone. Mexico approved a sugar import quota of 150,000 tonnes until the end of this year. Production has reached 4.98 million tonnes so far this season, up 11.5% from last year. Brazil’s 2nd largest sugar port is believed to have expanded capacity this year, which could mean shorter loading lines. Bangladesh is expected to buy 50,000 tonnes of white sugar on the world market.
TODAY’S GUIDANCE: The International Sugar Organization believes there will be a world production surplus of 3 million tonnes for the 2011/12 season, which would be up from a surplus of 800,000 tonnes for the 2010/11 season. Many private companies have even larger surpluses in their forecast models. Resistance for July sugar comes in at 23.17 and 23.83 with some light support at 22.52 today. Better support is at 21.98.
TODAY’S MARKET IDEAS: Position traders might wait to see the extent of the recovery bounce. We see an eventual move back down to 19.43 but would not rule out a bounce to 23.17 or higher first.
Tags: Softs, Sugar
About Terry Roggensack