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The market still looks vulnerable to increased selling if outside markets turn sour. India ministers will consider re-imposing a tax on white sugar prices next week as sugar millers fear a surge in imports. Sugar industry officials indicate that an import tax of at least 40% on white sugar is needed to support the industry after the recent sharp drop in prices. October sugar gave back all of their early gains yesterday to close slightly lower on the session and near the lows of the day. A turn down in the stock market helped pressure many commodity markets and the lack of much commercial buying support under the market allowed futures to drift lower after the early bounce. Strength in the energy markets failed to provide much support to sugar. The recovery in the stock market and some weakness in the US dollar overnight helped to support. Ideas that the Brazil harvest is progressing rapidly and could result in a major jump in production along with continued talk that India production should bolt higher this year helped to limit the buying on the early bounce. Russia beet area planted is up near 30% this year and industry officials see record production of refined sugar from the beet crop of near 4 million tonnes. This should reduce import demand for the 2010/11 season. The previous record was in 08/09 when the country refined 3.5 million tonnes. Mostly dry weather for harvest in Brazil into the middle of next week should keep a fast pace for sugar production for the season and will help ease some tightness in the pipeline.
TODAY’S GUIDANCE: It will not take much in the way of bearish action in outside markets to spark another round on long liquidation selling from fund traders. Non-commercial traders (funds) held a net long position of 122,593 contracts on the last COT report and this position appears way too high given the steep downtrend in futures prices and the outlook for a significant world production surplus for the coming year. Resistance for October sugar comes in at 14.94 and 15.11 with some support at 14.54 and 14.20.
Sugar Market Commentary – 2010.06.04
by Terry Roggensack on June 4, 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 still looks vulnerable to increased selling if outside markets turn sour. India ministers will consider re-imposing a tax on white sugar prices next week as sugar millers fear a surge in imports. Sugar industry officials indicate that an import tax of at least 40% on white sugar is needed to support the industry after the recent sharp drop in prices. October sugar gave back all of their early gains yesterday to close slightly lower on the session and near the lows of the day. A turn down in the stock market helped pressure many commodity markets and the lack of much commercial buying support under the market allowed futures to drift lower after the early bounce. Strength in the energy markets failed to provide much support to sugar. The recovery in the stock market and some weakness in the US dollar overnight helped to support. Ideas that the Brazil harvest is progressing rapidly and could result in a major jump in production along with continued talk that India production should bolt higher this year helped to limit the buying on the early bounce. Russia beet area planted is up near 30% this year and industry officials see record production of refined sugar from the beet crop of near 4 million tonnes. This should reduce import demand for the 2010/11 season. The previous record was in 08/09 when the country refined 3.5 million tonnes. Mostly dry weather for harvest in Brazil into the middle of next week should keep a fast pace for sugar production for the season and will help ease some tightness in the pipeline.
TODAY’S GUIDANCE: It will not take much in the way of bearish action in outside markets to spark another round on long liquidation selling from fund traders. Non-commercial traders (funds) held a net long position of 122,593 contracts on the last COT report and this position appears way too high given the steep downtrend in futures prices and the outlook for a significant world production surplus for the coming year. Resistance for October sugar comes in at 14.94 and 15.11 with some support at 14.54 and 14.20.
Tags: Softs, Sugar
About Terry Roggensack