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The technical action is positive and news that India will be a more active importer this year has been enough to support the current uptrend. However, the market still seems to need some help from outside markets and from a boost in commodity inflation to find new buyers. Headline news in Australia of wildfires is not in the sugar or wheat regions and will not impact these markets as temperatures soared to an all-time record high of 115.5 degrees in Melbourne over the weekend. Flooding in the sugar regions is a potential supply issue. The market pushed sharply higher on the session on Friday with follow-through buying helping March move as high as 13.25 before settling at 13.12, right near the 50% retracement mark of the August to October break. The market managed a slight new high for the move overnight as investor buying has been active. Fund buying and increased inflationary expectations combined with expectations that China and US stimulus packages will help steady the world economy helped to support the market and a rally in the stock market and weakness in the US dollar added to the positive tone. A large trade house reduced their world production forecast due to declining expectations for India production and this was also seen as supportive. The firm, however, warned that high prices this year in India and Pakistan could encourage increased production and Brazil production looks to increase significantly for the coming year. The Brazil increase could be major as a downward adjustment in ethanol exports from Brazil would suggest a greater percentage of the cane will be crushed to sugar.
Russia imports of raw sugar were down to 130,900 tonnes in December from 264,300 in November and compared with 168,000 tonnes in December of 2007. For the entire calendar year, imports totaled 2.42 million tonnes, down from 3.41 million the previous year. The Commitments-of-Traders reports on the weekend showed that trend-following funds continued to increased their net long position (up 1,546 contracts to 59,553) while index funds were fairly aggressive sellers reducing their net long by 4,553 contracts to 159,704.
