The threat of larger production from Brazil, India and Europe at the same time has kept the trend down. The lower close yesterday with a strong Brazilian currency and weak US dollar is seen as a bearish force, as the longer-term trend remains down. The market is still waiting for a pick-up in Brazil production, and the outlook is for a global production surplus. There are also ongoing concerns over global demand due to a trend towards less sugar in processed food and beverages. In addition, the threat that EU sugar production this year is up 15-20% due to a surge in beet plantings has helped to hold the trend down. July sugar pushed higher early yesterday, but sellers turned active again. Australia’s sugar output is seen falling 6% to 4.8 million tonnes from the tropical cyclone that hit in late March, according to the USDA Foreign Ag Service. Australia’s exports are seen falling 8% to 3.7 million tonnes due to the lower output. On the other hand, India’s 2017-18 sugar output is seen rising 25% to 25 million tonnes from 20 million this year, according to the National Federation of Coop Sugar Factories.
TODAY’S MARKET IDEAS: Even with sugar futures closing lower for the 9th week in a row last week, the COT report shows that speculators continue to hold a hefty net long position, and this leaves the market vulnerable to increased selling if support levels are violated. Near-term resistance for July sugar is at 16.76 with 15.79 as next downside target.