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The technical set-up remains bearish as high open interest, a very large net long position from fund traders and a long liquidation mode from trend-following funds helps drive prices lower. With the trend turning lower and trend-following funds net long 118,228 contracts, the selling intensified yesterday as last week’s lows were taken out. Ideas that the Brazil crop is coming along well and that the new crop supply will begin to ease the tightness on the world market helped to pressure. Traders see new crop hitting the market by late March and early April or sooner if the region turns dry. In addition, traders see the recent high prices as a reason to suspect declining global demand. May sugar closed sharply lower on the session with May futures driving down to the lowest level since December 22nd. The sharp drop in the open interest combined with a hefty net long position of funds has traders nervous over the potential for more long liquidation selling ahead. Last week’s indications of strong demand from India failed to support a resumption of the uptrend and the outside day down yesterday helped to spark more selling; especially when the market penetrated last week’s lows. The selling and the break stopped right on the 100-day moving average at 24.03 basis May futures. The market last closed under the 100-day moving average on December 9th. May sugar is now down as much as 18.1% off of the February 1st high. The key reversal on February 1st was confirmed as a top with a weekly key reversal for the week ending February 5th. A government panel on Friday indicated that India needs to urgently import 3-5 million tonnes. Lower than expected production from Mexico and increased demand from the US had traders looking for Mexico to import some sugar and export to the US. The International Sugar Organization revised their world production deficit forecast for the 2009/10 season to 9.4 million tonnes from 7.2 million previous. The deficit last year was 11.7 million tonnes.
TODAY’S GUIDANCE: The liquidation threat looks significant and the short-term trend looks down. Resistance for May sugar comes in at 24.40 and 25.03 with 23.07 as next objective.
Sugar Market Commentary – 2010.02.23
by Terry Roggensack on February 23, 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 technical set-up remains bearish as high open interest, a very large net long position from fund traders and a long liquidation mode from trend-following funds helps drive prices lower. With the trend turning lower and trend-following funds net long 118,228 contracts, the selling intensified yesterday as last week’s lows were taken out. Ideas that the Brazil crop is coming along well and that the new crop supply will begin to ease the tightness on the world market helped to pressure. Traders see new crop hitting the market by late March and early April or sooner if the region turns dry. In addition, traders see the recent high prices as a reason to suspect declining global demand. May sugar closed sharply lower on the session with May futures driving down to the lowest level since December 22nd. The sharp drop in the open interest combined with a hefty net long position of funds has traders nervous over the potential for more long liquidation selling ahead. Last week’s indications of strong demand from India failed to support a resumption of the uptrend and the outside day down yesterday helped to spark more selling; especially when the market penetrated last week’s lows. The selling and the break stopped right on the 100-day moving average at 24.03 basis May futures. The market last closed under the 100-day moving average on December 9th. May sugar is now down as much as 18.1% off of the February 1st high. The key reversal on February 1st was confirmed as a top with a weekly key reversal for the week ending February 5th. A government panel on Friday indicated that India needs to urgently import 3-5 million tonnes. Lower than expected production from Mexico and increased demand from the US had traders looking for Mexico to import some sugar and export to the US. The International Sugar Organization revised their world production deficit forecast for the 2009/10 season to 9.4 million tonnes from 7.2 million previous. The deficit last year was 11.7 million tonnes.
TODAY’S GUIDANCE: The liquidation threat looks significant and the short-term trend looks down. Resistance for May sugar comes in at 24.40 and 25.03 with 23.07 as next objective.
Tags: Softs, Sugar
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