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It may take more than just a one-day set-back to relieve the market of the overbought condition and the set-back in energy prices at the same time could spark some short-term pressure. It has been an impressive run off of the April 6th lows with October gaining nearly 300 points. With the longer-term trend up, traders can look to buy the set-back but we could see some choppy to lower trade for a few days before the market finds good support. July sugar closed sharply lower on the session yesterday as weakness in the US stock market and a firm tone to the US dollar helped to pressure the market. Funds have been very active buyers recently and the weakness in outside markets and a lack of new news for cash sugar activity contributed to some speculative long liquidation selling. Technical oriented traders were sellers on ideas that the market is overbought and that the nearby futures failed to find support on the move to 16 cents Tuesday. Traders suspect that buyers may get active on set-backs in the cash market including India, Pakistan and maybe even China. Mexico production so far this season has reached 4.75 million tonnes, down 5.2% from the same period last season. Ukraine officials see the decline in planted area of beets to cause a tightening of supply and a deficit of 500,000 tonnes of refined sugar for the season. Traders suspect that India needs another 400,000 tonnes of imports this season and 2.5 million tonnes next season. Open interest continues to climb and reached 687,013 contracts from 659,286 contracts to start the month.
TODAY’S GUIDANCE: The outlook for a significant world production deficit for this year and possible next should provide solid support on set-backs.
