Below is a sample of our 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 followed last Friday’s bad technical action up with a mostly inside day, but the rejection of the sub 17.00 level in the October contract seemed to alter the patently bearish tone toward sugar at the end of last week. In fact, the capacity to hold above Friday’s lows and then finish up over +2.0% on the prior close has to be seen a positive technical sign. With some fund and tech buying also cited during the Monday trade, it would appear that news of higher sugar output from India was given little attention yesterday. Apparently Indian output for the incoming production year was lifted to 25.5 million metric tons from just 18.7 million last year, and since the market managed to rally through that news, the trade must be focused on either the slow movement of the Brazilian crop or positive cash demand expectations. Noted strength in cash prices Monday suggests that perhaps demand is good enough to continue lifting prices, and that prompt supply has also remained a little tight. With Thailand recently tendering for some sugar despite that country being the second largest sugar exporter, there is obviously some interest in continuing the general uptrend that has been in place since the early part of May. However, the specs were still long sugar in the last COT positioning report, and the weather in Brazil doesn’t look to be a source of uncertainty. Those factors could eventually leave significant resistance up at the 18.00 level in the October sugar contract. In other potentially supportive demand side news, Bangladesh plans to import 50,000 tonnes of sugar before mid-September to meet its near-term needs, and the Philippines also looks to import 150,000 tonnes of sugar by the end of September. Therefore as long as outside market forces don’t undermine physical commodity markets, the bull camp looks to retain near term control.
TODAY’S GUIDANCE: Don’t forget the already overbought COT positioning in sugar, but it might not pay to fight the uptrend pattern until big picture macroeconomic issues create a bearish environment again or sugar flow through Brazil starts to weigh on the international sugar market.
