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A set-back in the US dollar after a 5-day rally was enough to spark some buying overnight. Ideas that the market is oversold after the recent weakness helped to support but it will take a move over 23.16 to penetrate the steep downtrend channel for March sugar and do any damage to the bearish pattern. The break off of the October 19th highs has been significant but chart support at 21.81 mostly held on the sell-off yesterday and this may be seen as somewhat positive. The break has attracted some interest from end users and this may also be seen as somewhat positive. Traders believe that India is close to increasing duty-free white sugar imports by another 1 million tonnes. Thailand is expected to start the 2009/10 crushing season a little earlier than normal on November 20th. Sugar production is expected to be near 7.1 million tonnes which was recently revised from near 7.6 million expected and compares with 7.14 million last year. March sugar pushed sharply lower on the session yesterday and saw aggressive selling pressure from a continued trend of long liquidation from speculators and funds. A continued rally in the US dollar and a sharp break in the US stock market had traders a little less interested in higher risk investments like commodities and helped to pressure. Talk of drier weather into the middle of next week helped to provide some additional selling pressure as harvest in Brazil can proceed more quickly. Ideas that the recent set-back in prices is attracting more interest from end users helped to provide some underlying support. A US food and beverage trade group is urging the USDA to expand import quotas by an additional 850,000-1.0 million short tonnes this year. Indonesia and Bangladesh may also be in the market for sugar soon. While there are many traders who believe the highs are in place, the world stocks/usage is extremely tight and some trade houses are comparing the tightness to the mid-1970’s and the early 1980’s when prices topped near 66 cents and near 45 cents respectively.
TODAY’S GUIDANCE: The short-term technical action is negative but the market has been able to hold support and it should not take much in the way of export news to turn the minor trend back up. Fundamentals look bullish into early 2010.
