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After the sharp break of more than 15% last week, sugar has consolidated in a choppy range this week. The weaker tone coming from outside markets and fears of the overbought condition of the market helped spark the sell-off and traders are now trying to determine if a major top is in place. This is difficult to say as cash trader psychology and spec trader confidence are important forces. From a fundamental point of view, the market remains in an extremely tight stocks situation and the tightness looks to persist until at least April and much of the early harvested cane crop from Brazil is likely spoken for so there could be another leg higher in prices into late February or March. May sugar closed moderately lower on the session yesterday but well off of the early lows. Selling pressures eased on the day after the US dollar fell back from the early highs and energy markets and the stock market firmed. Ideas that the tightness issues for the market will be resolved when Brazil harvest gets going in the spring and a lack of new news for the cash market helped to support. Brazil harvest in the center-south region is winding down as rains make it slow to get much complete during the rainy season but mills have stayed open much longer than normal as high prices for sugar and ethanol are attractive. For the April09 to March10 season, Brazil mills in the center-south region have crushed 529.6 million tonnes, up 5.7% from the previous season. The region has produced 23 billion liters of ethanol, down 7.4%. Pakistan has dropped a tender to buy 150,000 tonnes of white sugar due to problems with the terms of the lowest bidder. India mills are shutting down earlier than normal this season in the two largest producing states due to lower cane supply. The Brazil government is coming out with a series of measures to boost fertilizer production as the country imports near 65% of their needs. For the 2009/10 season, Mexico has produced 1.609 million tonnes of sugar, down 9.97% from last year.
TODAY’S GUIDANCE: May sugar support comes in at 25.72 with 26.94 and 27.42 as resistance. A resumption of the uptrend will leave 30.55 as a longer-term objective.
TODAY’S MARKET IDEAS: Given the strong cash market fundamentals, the market seems to be in a position to at least challenge better resistance points in the 26.94-27.42 zone soon.
Sugar Market Commentary – 2010.02.11
by Terry Roggensack on February 11, 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!
After the sharp break of more than 15% last week, sugar has consolidated in a choppy range this week. The weaker tone coming from outside markets and fears of the overbought condition of the market helped spark the sell-off and traders are now trying to determine if a major top is in place. This is difficult to say as cash trader psychology and spec trader confidence are important forces. From a fundamental point of view, the market remains in an extremely tight stocks situation and the tightness looks to persist until at least April and much of the early harvested cane crop from Brazil is likely spoken for so there could be another leg higher in prices into late February or March. May sugar closed moderately lower on the session yesterday but well off of the early lows. Selling pressures eased on the day after the US dollar fell back from the early highs and energy markets and the stock market firmed. Ideas that the tightness issues for the market will be resolved when Brazil harvest gets going in the spring and a lack of new news for the cash market helped to support. Brazil harvest in the center-south region is winding down as rains make it slow to get much complete during the rainy season but mills have stayed open much longer than normal as high prices for sugar and ethanol are attractive. For the April09 to March10 season, Brazil mills in the center-south region have crushed 529.6 million tonnes, up 5.7% from the previous season. The region has produced 23 billion liters of ethanol, down 7.4%. Pakistan has dropped a tender to buy 150,000 tonnes of white sugar due to problems with the terms of the lowest bidder. India mills are shutting down earlier than normal this season in the two largest producing states due to lower cane supply. The Brazil government is coming out with a series of measures to boost fertilizer production as the country imports near 65% of their needs. For the 2009/10 season, Mexico has produced 1.609 million tonnes of sugar, down 9.97% from last year.
TODAY’S GUIDANCE: May sugar support comes in at 25.72 with 26.94 and 27.42 as resistance. A resumption of the uptrend will leave 30.55 as a longer-term objective.
TODAY’S MARKET IDEAS: Given the strong cash market fundamentals, the market seems to be in a position to at least challenge better resistance points in the 26.94-27.42 zone soon.
Tags: Softs, Sugar
About Terry Roggensack