Author: Michael Ferrari, PhD
VP, Applied Technology & Research
Spot sugar futures are hovering around the low 14 cent range, with the start of the week showing some strength as many in the market may have seen the recent slide as overdone. While crude oil along with the
broader commodity futures market continuing to slide, as long positions are liquidated, sugar may stand out as a buying opportunity. The WTI forecast for a favorable start to the 2010 Indian monsoon was issued
two weeks ago, and it is noted that a good start does not necessarily translate to a complete rebound over last year’s poor crop, where a lack of moisture contributed to very low production and yields. An improvement is anticipated, but readers should remember that the global physical supply balance still stands at a deficit, but readers should remember that the global physical supply balance still stands at a deficit, and there will likely not be a return to a net surplus status until the Oct/Sep 2010/11 crop year. So in the short term, physicals are still short and anticipated to remain short; therefore, our extended seasonal view for the market represents this reality and a constructive pattern in nearby futures should follow.
