The Indian sugar market has been schizophrenic over the last two months. Mother Nature has done her best to keep the world guessing about this year’s supplies. The market has shifted from concerns of too much rain, too early which would have dampened output to the realization that the India will most likely end up producing its fifth consecutive surplus. The current shift towards concern of oversupply is now the dominant factor in this market.
COMMERCIAL PLAYERS
The clearest view of the market’s consensus lies in the CFTC’s weekly Commitment of Traders Report. Commercial traders were net long the sugar futures market as recently as early August. They’ve since become net short more than 123,000 contracts. Their selling in each of the last three weeks brings them to levels not seen since August of last year when sugar was still trading above $.20 per pound.
We feel that commercial selling pressure due to new fundamental data pointing towards another large crop is the reason why the sugar market has been unable to gain any traction, despite breaking out above the downward channel it has beentrading in for the last two years early this month.
LOOKING FOR NEW LOWS
Therefore, we will be siding with the commercial traders and looking for further weakness in this market. Based on Friday’s trade, we feel that the interim highs have been made and will placing protective buy stops above Thursday’s high of $.1824 per pound. First support is around $.165 per pound but, overall, we expect new lows below July’s.
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Do you trade the softs? What do you think of these markets?
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