Author: Michael Ferrari, PhD
VP, Applied Technology & Research

October ICE sugar futures remain at the precarious 22+ cent range early Monday, as the market struggles to find a fair value range in the midst of supply side uncertainty. The size of the production deficit in India, primarily driven by poor monsoon rains is still debated, but the fact that the world’s second largest producer will remain a net importer lends price support at current levels. Rainfall in UP picked up last week, and the current satellite (from Monday am) shows more moisture availability than the region has seen vs. the last few weeks, the seasonal pattern is still largely deficient, and the optimism among traders recently will soon fade as the drier pattern returns and will remain until late September. Refer to the attached India weekly weather report for the seasonal verification chart. Despite some short term upside support still possible for the OCT contract, we are looking for a pullback ahead of the Oct expiration and there should be a considerable opportunity to capitalize on a downward move re: Mar10.