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The market looks to remain volatile in the months just ahead as we see a shift from an extremely tight cash situation to more supply as the 2010/2011 crop from Brazil starts to see some progress. This may not be significant until April or May so the next few months could remain volatile and if buyers need sugar, there could be more upside potential. Brazil has temporarily cut the mandated amount of ethanol in their gasoline blend to 20% from 25% due to tightening supply during the non harvest period. Indonesia sugar production came in below expectations at 2.4 million tonnes which is well under the recent government forecast of 2.67 million tonnes from October and this could lead to increased import buying. Three Indonesia state firms bought a total of 147,500 tonnes of white sugar. The Philippines may import near 100,000 tonnes of raw sugar and may also release government stocks onto the market in an attempt to keep local prices down. March sugar closed sharply lower yesterday for the third session in a row and has now dropped 220 points from Thursday’s highs which were also 29 year highs for the nearby futures. Talk of aggressive selling from index funds, thought to be re-balancing, helped to pressure the market. Talk of the extreme overbought condition of the market and ideas that the market has seen a loss in upside momentum and a key reversal from Thursday helped to pressure the market as well. Talk of increasing supply ahead as last year’s high prices could spark a significant supply reaction for the second half of 2010 was seen as a potential bearish force ahead. The COT reports for the week ending January 5th showed a long liquidation trend from index funds who were net sellers of 4,464 contracts on the week to reduce their net long position to 187,769 contracts. Ideas that India will continue to be a strong importer in the months just ahead and the lack of a supply from Brazil are seen as a positive short-term forces for the market.
TODAY’S GUIDANCE: The market seems vulnerable to a significant technical correction but the break may not last long as there appears to be more demand and tight supply ahead. March sugar near-term support levels include 26.93 and 26.58 with 29.80 and 30.42 as next upside objectives.
TODAY’S MARKET IDEAS: Consider buying breaks.
Sugar Market Commentary – 2010.01.12
by Terry Roggensack on January 12, 2010
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 market looks to remain volatile in the months just ahead as we see a shift from an extremely tight cash situation to more supply as the 2010/2011 crop from Brazil starts to see some progress. This may not be significant until April or May so the next few months could remain volatile and if buyers need sugar, there could be more upside potential. Brazil has temporarily cut the mandated amount of ethanol in their gasoline blend to 20% from 25% due to tightening supply during the non harvest period. Indonesia sugar production came in below expectations at 2.4 million tonnes which is well under the recent government forecast of 2.67 million tonnes from October and this could lead to increased import buying. Three Indonesia state firms bought a total of 147,500 tonnes of white sugar. The Philippines may import near 100,000 tonnes of raw sugar and may also release government stocks onto the market in an attempt to keep local prices down. March sugar closed sharply lower yesterday for the third session in a row and has now dropped 220 points from Thursday’s highs which were also 29 year highs for the nearby futures. Talk of aggressive selling from index funds, thought to be re-balancing, helped to pressure the market. Talk of the extreme overbought condition of the market and ideas that the market has seen a loss in upside momentum and a key reversal from Thursday helped to pressure the market as well. Talk of increasing supply ahead as last year’s high prices could spark a significant supply reaction for the second half of 2010 was seen as a potential bearish force ahead. The COT reports for the week ending January 5th showed a long liquidation trend from index funds who were net sellers of 4,464 contracts on the week to reduce their net long position to 187,769 contracts. Ideas that India will continue to be a strong importer in the months just ahead and the lack of a supply from Brazil are seen as a positive short-term forces for the market.
TODAY’S GUIDANCE: The market seems vulnerable to a significant technical correction but the break may not last long as there appears to be more demand and tight supply ahead. March sugar near-term support levels include 26.93 and 26.58 with 29.80 and 30.42 as next upside objectives.
TODAY’S MARKET IDEAS: Consider buying breaks.
Tags: Softs, Sugar
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