Sugar Not So Sweet For Bulls!
The recent rally above the 10-cent level for October Raw Sugar futures failed to spur fresh momentum buying, as origin sellers took advantage of the rally to hedge production and send prices tumbling to 3-week lows in early trade today. The N.Y market has received no help from the White Sugar market traded in London, which fell to 21-month lows this morning, as Russia still has not raised its import duty on Sugar. The import duty was expected to increase short-term demand, as buyers covered their needs before it took effect. Large Sugar surpluses in Brazil and India have also pressed Sugar prices lower – India is expected to have 1.3 million tons of White Sugar available for export this month, with exporters looking to be eager sellers on any price increases. Despite weak fundamentals, the most recent Commitment of Traders report shows both large and small speculators holding a net-long position of 105,836 contracts as of July 31st, which leaves room for further liquidation selling should prices continue to tumble.
Looking at the daily chart for October Sugar, we notice prices approaching the 100-day moving average, currently at 9.71. Many technicians consider this key moving average the arbiter as to whether a market is in a bullish or bearish long-term trend, so a close below this level could be the catalyst for further speculative liquidation or even a switching of positions to the short side. The 14-day RSI looks weak, with a reading of 34.72. 9.71 will be key support for October Sugar, with resistance seen at the psychologically important 10-cent level. In early trade, October Sugar is trading at 9.81, down 0.03.
