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If outside markets were to signal some short-term weakness in commodity markets, sugar looks vulnerable to a significant downside correction as speculators continue to hold a massive net long. Keep in mind, the large and small specs combined held a net long position of 148,950 contracts in the last COT report which is a historically high level and last years high prices might translate into higher world production ahead. In fact, even last year’s major world importer, India, is exporting white sugar on the world market for the first time in two years. India is offering sugar on the market at $90 premium to the London white futures market which is well below Thailand offers near $200 premium. Thailand offers hit a peak near $250 premium in July. Traders see India production near 25 million tonnes this season from 18.8 million this past season and compared with consumption which is thought to be near 23 million tonnes. Recently, however, there is talk that India production could be even higher with trade house rumors this week indicating that key producing regions in India saw a jump of up to 35% in planted area. October sugar closed moderately higher on the session yesterday and near the highs of a 64 point trading range. Futures were sharply lower early in the day under pressure from weak commodity and energy markets and choppy trade in the US dollar. The market is continuing to find supply concerns out of Europe and Eastern Europe/FSU beet growing regions and from ideas that import demand will increase in this region and from Pakistan import demand as well. There is also increased talk, however, that India will be supplying white sugar to Pakistan this year. Talk of the potential oversupply from India and Brazil helped to pressure the market early.
TODAY’S GUIDANCE: While the market has inched back up to near the early August highs, the supply fundamentals seem to be shifting more toward the bear camp as tightness in India supply has shifted to the country moving to an exporter for the first time in a few years. The market is also in a very overbought condition when looking at the spec net long position and if India production is higher than expected, fund and speculative longs might begin to search for other markets to “buy and hold”. Resistance for October sugar comes in at 19.60 and a move back under 19.18 might be considered a negative technical development. Key support is back at 18.22 and then 17.15.
Sugar Market Commentary – 2010.08.19
by Terry Roggensack on August 19, 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!
If outside markets were to signal some short-term weakness in commodity markets, sugar looks vulnerable to a significant downside correction as speculators continue to hold a massive net long. Keep in mind, the large and small specs combined held a net long position of 148,950 contracts in the last COT report which is a historically high level and last years high prices might translate into higher world production ahead. In fact, even last year’s major world importer, India, is exporting white sugar on the world market for the first time in two years. India is offering sugar on the market at $90 premium to the London white futures market which is well below Thailand offers near $200 premium. Thailand offers hit a peak near $250 premium in July. Traders see India production near 25 million tonnes this season from 18.8 million this past season and compared with consumption which is thought to be near 23 million tonnes. Recently, however, there is talk that India production could be even higher with trade house rumors this week indicating that key producing regions in India saw a jump of up to 35% in planted area. October sugar closed moderately higher on the session yesterday and near the highs of a 64 point trading range. Futures were sharply lower early in the day under pressure from weak commodity and energy markets and choppy trade in the US dollar. The market is continuing to find supply concerns out of Europe and Eastern Europe/FSU beet growing regions and from ideas that import demand will increase in this region and from Pakistan import demand as well. There is also increased talk, however, that India will be supplying white sugar to Pakistan this year. Talk of the potential oversupply from India and Brazil helped to pressure the market early.
TODAY’S GUIDANCE: While the market has inched back up to near the early August highs, the supply fundamentals seem to be shifting more toward the bear camp as tightness in India supply has shifted to the country moving to an exporter for the first time in a few years. The market is also in a very overbought condition when looking at the spec net long position and if India production is higher than expected, fund and speculative longs might begin to search for other markets to “buy and hold”. Resistance for October sugar comes in at 19.60 and a move back under 19.18 might be considered a negative technical development. Key support is back at 18.22 and then 17.15.
Tags: Softs, Sugar
About Terry Roggensack