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The market does not seem to have the longer-term supply/demand fundamentals to see an extension of the May to August rally as most traders see a world production surplus this year. Pent-up demand for new crop Brazil sugar late this spring and into the summer has supported very active exports from Brazil which reached a monthly record high for July. However, Brazil is also in a position to see record production this year with cumulative production since the start of the season near 30% higher than last year’s pace. October sugar closed moderately higher on the session yesterday and managed to see strong gains off of the overnight lows and solid gains from the early session lows. Continued fund buying in many commodity markets despite the sharp rally in the US dollar helped to support the recovery bounce. In addition, traders see the backlog of ships waiting to load sugar out of Brazil as a sign of strong near-term demand. Central American countries saw production for the 2009/10 season reach 4.43 million tonnes, up 5.5% from last year with exports running 6.3% higher than last year. There are no estimates for new crop production but given the sugar price in the past year and a higher level of profitability, producers have the incentive to boost production again this coming season. A recovery from two years of poor production out of India would suggest that world production will exceed consumption for the 2010/2011 season and India weather appears to be improving recently.
TODAY’S GUIDANCE: Short term demand could ease soon and the market is technically overbought. The outside day down seen on Monday would suggest that a top may be in place.
TODAY’S MARKET IDEAS: Selling resistance for October sugar comes in at 18.97 with 18.22 and 17.15 as initial downside support.
Sugar Market Commentary – 2010.08.05
by Terry Roggensack on August 5, 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 does not seem to have the longer-term supply/demand fundamentals to see an extension of the May to August rally as most traders see a world production surplus this year. Pent-up demand for new crop Brazil sugar late this spring and into the summer has supported very active exports from Brazil which reached a monthly record high for July. However, Brazil is also in a position to see record production this year with cumulative production since the start of the season near 30% higher than last year’s pace. October sugar closed moderately higher on the session yesterday and managed to see strong gains off of the overnight lows and solid gains from the early session lows. Continued fund buying in many commodity markets despite the sharp rally in the US dollar helped to support the recovery bounce. In addition, traders see the backlog of ships waiting to load sugar out of Brazil as a sign of strong near-term demand. Central American countries saw production for the 2009/10 season reach 4.43 million tonnes, up 5.5% from last year with exports running 6.3% higher than last year. There are no estimates for new crop production but given the sugar price in the past year and a higher level of profitability, producers have the incentive to boost production again this coming season. A recovery from two years of poor production out of India would suggest that world production will exceed consumption for the 2010/2011 season and India weather appears to be improving recently.
TODAY’S GUIDANCE: Short term demand could ease soon and the market is technically overbought. The outside day down seen on Monday would suggest that a top may be in place.
TODAY’S MARKET IDEAS: Selling resistance for October sugar comes in at 18.97 with 18.22 and 17.15 as initial downside support.
Tags: Softs, Sugar
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