Sugar may continue to find headwinds from sluggish risk sentiment, and at this point needs fresh bullish supply news in order to sustain a recovery move. March sugar closed lower yesterday and experienced the seventh negative close in the last eight sessions. Outside markets such as equities and crude oil remain weak, while the Brazilian currency has shown little indication of recovering from a more than 4% decline during the past 6 sessions. Chinese trade officials projected a 11% increase in their 2016/17 sugar production from last season which is on the higher end of recent forecasts, and also hinted that 150,000 tonnes of Chinese state sugar reserves would be auctioned next week. Although China will still have a need for plenty of sugar imports this season, this may soften their overall demand outlook going forward. Egypt’s Chamber of Commerce sugar committee has asked their nation’s Supply Ministry to increase sugar stockpiles to at least 300,000 tonnes to help balance prices. The latest COT report will be released after today’s close and reflects a massive 174 tick price decline (7.6% in value) between the October 25th and November 1st measuring dates.
TODAY’S MARKET IDEAS: A larger China production outlook and increased efforts to sell sugar from reserves should help to ease some tightness in Asia. In addition, the market remains in a long liquidation selling mode. March sugar resistance is at 21.94 and there is some short-term support at the 21.19 to 21.12 zone. Below this, 20.65 and then 19.58 become into focus.