Is 2014 Another Sour Year For Sugar?
Today’s Spotlight Market?? -? After taking the latter half of December off, bears have once again taken control of the Sugar market.? Sugar prices fell 16% in 2013, which is the third straight annual decline for the sweetener. The market has been lower in four of five trading sessions this year, after briefly recovering late last year.?? Many analysts are forecasting a fourth consecutive global surplus, which could push inventories beyond already record high levels.? This could put continued pressure on the Sugar market.
Fundamentals? -? Australian Sugar production is expected to top last year?s levels, which may contribute to the world glut in the Sugar market.? The world?s third largest exporter is forecast to produce over 32 million metric tons of Sugar in 2014, up from 30.5 million metric tons in 2013.? Brazil, Thailand and India are all expected to export more Sugar in 2014. In addition to rising output, demand for Sugar has remained relatively lackluster to this point.? Chinese Sugar production from the fourth quarter was down 7% relative to 2013, which suggests China could import more of the sweetener this year, partially offsetting the increased production elsewhere.? Indian farmers have been forced to unload Sugar to pay off debt, which has pushed Indian Sugar prices to their lowest levels in over 3 years.
Technical Notes? -? View Today’s Chart
The March Sugar contract bounced back in late December, but this proved to simply be a case of a short-covering.? The chart did show signs of a possible key reversal., but the market failed to complete a V -shaped reversal and prices consolidated.? The recent selling pressure suggests prices are breaking out of the consolidation to the downside.? The March contract has broken support at the 16.55 level. Prices later tested this level, but failed to hold the 16.55 mark, establishing the level as resistance.?? The next support area can be found near 14.70.? The RSI indicator has recovered from oversold levels and is now in neutral territory.
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