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Commodity markets in general are showing a positive tilt overnight but sugar is not. The reversal from a six-month peak along with ideas that congestion is easing at Brazil ports helped to pressure. In addition, cooler and rainy weather is moving into the Russia and Ukraine producing areas which is seen as a negative development. October sugar closed lower on the session yesterday after trading at the highest level since March 1st. Trade remained choppy in New York while London played catch up with Tuesday’s late run in sugar. Traders await official monthly production updates from Brazil for release today but there is some expectations that dry weather in Brazil this harvest season could cause yields to begin to decline for the tail end of the crop and that there may be revisions lower from previous expectations. The International Sugar Organization sees a world production surplus of 3.22 million tonnes for the 2010/11 season as compared with a deficit of 4.95 million tonnes last year. Rains in Russia this week may not reverse losses expected after severe drought conditions in August but at least this may be seen as a reason to suspect that the production potential may at least stabilize. Traders had been expecting record sugar production of near 4 million tonnes before the drought but the Russia Sugar Producers Union has lowered their estimate to 3.2-3.3 million tonnes and some private forecasts have dipped as low as 2.8 million tonnes. India weather remains favorable for a large crop.
TODAY’S GUIDANCE: The reversal from six month highs may be seen as a negative technical development and some rains in Russia and talk of easing congestion in Brazil may be factor to encourage speculators to liquidate part of their large net long position. Resistance for October sugar comes in at 2016 with 19.28 and 18.94 as initial support.
Sugar Market Commentary – 2010.08.26
by Terry Roggensack on August 26, 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!
Commodity markets in general are showing a positive tilt overnight but sugar is not. The reversal from a six-month peak along with ideas that congestion is easing at Brazil ports helped to pressure. In addition, cooler and rainy weather is moving into the Russia and Ukraine producing areas which is seen as a negative development. October sugar closed lower on the session yesterday after trading at the highest level since March 1st. Trade remained choppy in New York while London played catch up with Tuesday’s late run in sugar. Traders await official monthly production updates from Brazil for release today but there is some expectations that dry weather in Brazil this harvest season could cause yields to begin to decline for the tail end of the crop and that there may be revisions lower from previous expectations. The International Sugar Organization sees a world production surplus of 3.22 million tonnes for the 2010/11 season as compared with a deficit of 4.95 million tonnes last year. Rains in Russia this week may not reverse losses expected after severe drought conditions in August but at least this may be seen as a reason to suspect that the production potential may at least stabilize. Traders had been expecting record sugar production of near 4 million tonnes before the drought but the Russia Sugar Producers Union has lowered their estimate to 3.2-3.3 million tonnes and some private forecasts have dipped as low as 2.8 million tonnes. India weather remains favorable for a large crop.
TODAY’S GUIDANCE: The reversal from six month highs may be seen as a negative technical development and some rains in Russia and talk of easing congestion in Brazil may be factor to encourage speculators to liquidate part of their large net long position. Resistance for October sugar comes in at 2016 with 19.28 and 18.94 as initial support.
Tags: Softs, Sugar
About Terry Roggensack