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Speculative short-covering supported a bounce in July sugar but other months were under heavy selling pressure from significant weakness in outside markets. October sugar saw follow-through selling pressures from the weak technical action Monday and bearish outside market forces dominated the trade psychology yesterday. October closed sharply lower on the day and quickly pushed through 15.53 support to close at 15.28. A 50% correction of the May to June rally provided some support at 15.17. Talk of the overbought technical condition of the market, a sharp break in the stock market and weakness in energy prices help spark speculative selling pressures for much of the session. Ideas of more global economic weakness ahead after a recent string of poor economic reports helped to pressure most commodity markets. With a big premium of July over the October futures, traders see small deliveries against the July contract of less than 10,000 contracts. Ideas that the China growth outlook is declining and the collapse in energy prices were seen as especially negative forces to the sugar market. Thailand may need to import near 100,000 tonnes to replace sugar already sold due to strong domestic usage. Pakistan issued a tender to import 175,000 tonnes of white sugar. China will auction off 100,000 tonnes of state sugar reserves on July 6th in an effort to ensure sufficient supply and stabilize prices.
TODAY’S GUIDANCE: Strong demand in the cash market and a backlog of ships waiting to load out of Brazil are positive forces but specs hold a massive net long position and speculative long liquidation could be the dominant force over the short-term.
TODAY’S MARKET IDEAS: Short-term resistance comes in at 15.53 with support coming in at 15.17 and 14.82.
Sugar Market Commentary – 2010.06.30
by Terry Roggensack on June 30, 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!
Speculative short-covering supported a bounce in July sugar but other months were under heavy selling pressure from significant weakness in outside markets. October sugar saw follow-through selling pressures from the weak technical action Monday and bearish outside market forces dominated the trade psychology yesterday. October closed sharply lower on the day and quickly pushed through 15.53 support to close at 15.28. A 50% correction of the May to June rally provided some support at 15.17. Talk of the overbought technical condition of the market, a sharp break in the stock market and weakness in energy prices help spark speculative selling pressures for much of the session. Ideas of more global economic weakness ahead after a recent string of poor economic reports helped to pressure most commodity markets. With a big premium of July over the October futures, traders see small deliveries against the July contract of less than 10,000 contracts. Ideas that the China growth outlook is declining and the collapse in energy prices were seen as especially negative forces to the sugar market. Thailand may need to import near 100,000 tonnes to replace sugar already sold due to strong domestic usage. Pakistan issued a tender to import 175,000 tonnes of white sugar. China will auction off 100,000 tonnes of state sugar reserves on July 6th in an effort to ensure sufficient supply and stabilize prices.
TODAY’S GUIDANCE: Strong demand in the cash market and a backlog of ships waiting to load out of Brazil are positive forces but specs hold a massive net long position and speculative long liquidation could be the dominant force over the short-term.
TODAY’S MARKET IDEAS: Short-term resistance comes in at 15.53 with support coming in at 15.17 and 14.82.
Tags: Softs, Sugar
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