Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets, visit futures-research.com for your free 2 week trial!
The market is likely to remain volatile over the near-term but commodity markets in general seemed to have turned the corner. Weakness in the energy sector will remain a concern for the market but it appears that a long and intense recession may have been avoided with the US and world stimulus to banks, credit issues and the monetary base. Economic data is likely to remain poor but commodity prices may have recently priced-in a major recession and overshot fair value. The weaker currency in Europe helped pressure London futures while the rollover to the downside in crude oil helped US sugar set-back from the highs yesterday. While spillover support from firmer equity markets and Wednesday’s Fed rate cut initially provided a lift to March sugar to start off higher yesterday, gains were cut short by a rebound in the Dollar, a slide in oil prices and more bearish economic news. Month end book squaring and portfolio adjustments was given as the primary reason for the Dollar’s comeback which diminished the appeal of physical commodities such as sugar. But we suspect the sugar market was also pull back by the US 3rd quarter GDP showing a 3.3% drop in consumer spending and certainly leaves the demand environment bearish. With still no word on whether the US will import more sugar, the market may lack a bullish catalyst unless the Dollar trades sharply lower. Tight global credit conditions are still a problem that is restraining trade as the market deals with the potential for defaults from smaller companies who bought ahead of the late September/early October break. Open interest continues to decline and it would be a positive sign to see some stability or even higher open interest ahead.
Sugar Market Commentary – 2008.10.31
by Terry Roggensack on October 31, 2008
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets, visit futures-research.com for your free 2 week trial!
The market is likely to remain volatile over the near-term but commodity markets in general seemed to have turned the corner. Weakness in the energy sector will remain a concern for the market but it appears that a long and intense recession may have been avoided with the US and world stimulus to banks, credit issues and the monetary base. Economic data is likely to remain poor but commodity prices may have recently priced-in a major recession and overshot fair value. The weaker currency in Europe helped pressure London futures while the rollover to the downside in crude oil helped US sugar set-back from the highs yesterday. While spillover support from firmer equity markets and Wednesday’s Fed rate cut initially provided a lift to March sugar to start off higher yesterday, gains were cut short by a rebound in the Dollar, a slide in oil prices and more bearish economic news. Month end book squaring and portfolio adjustments was given as the primary reason for the Dollar’s comeback which diminished the appeal of physical commodities such as sugar. But we suspect the sugar market was also pull back by the US 3rd quarter GDP showing a 3.3% drop in consumer spending and certainly leaves the demand environment bearish. With still no word on whether the US will import more sugar, the market may lack a bullish catalyst unless the Dollar trades sharply lower. Tight global credit conditions are still a problem that is restraining trade as the market deals with the potential for defaults from smaller companies who bought ahead of the late September/early October break. Open interest continues to decline and it would be a positive sign to see some stability or even higher open interest ahead.
Tags: Softs, Sugar
About Terry Roggensack