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The market looks to remain in a volatile state as “uncertainty” over the impact of the proposed new banking regulations was enough to spark a long liquidation trend overnight. While futures saw a recovery into the close yesterday from a severe mid-session break, the selling from liquidation emerged again overnight. Limiting the speculative activities of banks could have some impact in the long run on market prices but the initial reaction is clearly negative. Keep in mind; index funds held a net long position of 166,564 contracts as of January 12th and hedge funds (trend-following funds) were net long more than 125,000 contracts. While there is only a very remote chance that any of these funds will be forced to liquidate or will be closed without bank sponsorship, the uncertainty may be enough to spark some short-term selling. March sugar closed slightly higher on the session yesterday after a wild and volatile day. With a range of 114 points, March sugar closed just 15 higher on the day after making new 29 year highs early in the session for the third day in a row. The market was supported by a surge to new all-time highs in the London futures and the volatile session came about with a clash of short-term bearish outside forces such as a sharp decline in energy markets and the stock market with the presence of significant buying interest for new cash business. Talk of Russian imports ahead and tight India stocks helped support. Growers from Mexico indicate that the country will need to import near 450,000 tonnes this year to rebuild inventories and to meet export commitments. The Agriculture Minister indicated that the crop will slide to the 4.5-4.9 million tonne level as compared with production of 4.96 million tonnes last year. Last year’s production was low and forced Mexico to import 550,000 tonnes. There is also talk of a fungus disease in Brazil which has been floating around for a week or so but without confirmation.
TODAY’S GUIDANCE: There is increased risk to a long liquidation sell-off with yesterday’s news. Support for March sugar comes in at 28.63 and 28.27 with 31.02 as next upside objective.
Sugar Market Commentary – 2010.01.22
by Terry Roggensack on January 22, 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 in a volatile state as “uncertainty” over the impact of the proposed new banking regulations was enough to spark a long liquidation trend overnight. While futures saw a recovery into the close yesterday from a severe mid-session break, the selling from liquidation emerged again overnight. Limiting the speculative activities of banks could have some impact in the long run on market prices but the initial reaction is clearly negative. Keep in mind; index funds held a net long position of 166,564 contracts as of January 12th and hedge funds (trend-following funds) were net long more than 125,000 contracts. While there is only a very remote chance that any of these funds will be forced to liquidate or will be closed without bank sponsorship, the uncertainty may be enough to spark some short-term selling. March sugar closed slightly higher on the session yesterday after a wild and volatile day. With a range of 114 points, March sugar closed just 15 higher on the day after making new 29 year highs early in the session for the third day in a row. The market was supported by a surge to new all-time highs in the London futures and the volatile session came about with a clash of short-term bearish outside forces such as a sharp decline in energy markets and the stock market with the presence of significant buying interest for new cash business. Talk of Russian imports ahead and tight India stocks helped support. Growers from Mexico indicate that the country will need to import near 450,000 tonnes this year to rebuild inventories and to meet export commitments. The Agriculture Minister indicated that the crop will slide to the 4.5-4.9 million tonne level as compared with production of 4.96 million tonnes last year. Last year’s production was low and forced Mexico to import 550,000 tonnes. There is also talk of a fungus disease in Brazil which has been floating around for a week or so but without confirmation.
TODAY’S GUIDANCE: There is increased risk to a long liquidation sell-off with yesterday’s news. Support for March sugar comes in at 28.63 and 28.27 with 31.02 as next upside objective.
Tags: Softs, Sugar
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