Enough Of QE For The Moment, Let?s Talk Sugar
Today’s Spotlight Market
Non-commercial traders have been net-short of Sugar futures of late, but the recent price rally has seen this overall short-position begin to dwindle. The most recent Commitment of Traders report shows non-commercial traders net-short just over 3,800 contracts for the reporting period ending January 13. However, this short position was reduced by over 17,000 contracts during this period as prices rallied sharply from recent lows. Non-commercial traders, which are normally small speculative accounts, also reduced their net-short position by over 2,000 contracts during the same time period.
Fundamentals
I don?t know about our readers, but I am ready to move on from all the European QE talk and get back to talking markets and today let?s look at a market we have not discussed in some time?Sugar. The Sugar futures market has been in bearish control since early in 2011 when prices reached heights not seen since 1980. Once again the cure for high prices was indeed high prices, as global production increased and demand waned which helped to send prices tumbling from a high of over 36 cents per pound in 2011 to just above 13 cents late last year. Recently there have been signs that the Sugar market may be attempting to form a bottom. First we have the upcoming gasoline and diesel tax hike in Brazil that is set to begin on February1. This move is expected to spur increased demand for cane based Ethanol in Brazil, which is the global leader in Sugarcane production.? Additional cane Ethanol production will curtail the supplies of Sugarcane available for use in raw Sugar production, which could help to lessen the expected global production surplus this year. In addition, below average rainfall in the center-south region of Brazil, where the vast majority of the nation?s cane crop is grown, have some analysts concerned about production totals this season, which is helping to add an additional bullish factor towards a potential near-term bottom in the market.??? ?
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for Sugar futures, prices attempting to form a near-term bottom after the price-decline to start the year, failed to test the most recent lows made back in September of last year. The most recent up-move has allowed prices to rise above the 20-week moving average, as well as trade above the major down-trend line drawn from the major high made back in 2011. The 14-week RSI has moved to a more neutral reading of 52.43. There is some chart resistance near the 17.00 price level although major resistance is not found until closer to18.00. Support is found at the 2015 low of 14.07, with major chart support found at 13.32.??
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