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The market looks poised for a resumption of the uptrend if the outside market forces remain positive. There appears to be enough demand from India to support active imports for the season and the world faces a world production deficit for the second year in a row. A recovery in the energy markets and a positive tone for the stock market has added to the positive tone today. October sugar closed moderately higher on the session yesterday as the early weakness failed to attract new selling interest and fund buying emerged to support. A sharp break in energy markets helped to pressure the market early. Ideas that India will be in the market to extend coverage on breaks helped to support. In addition, there is talk that China production will be smaller this year and that the US will need to import more sugar due to developing tightness ahead. The USDA on Friday pegged the 2009/10 stocks/usage at 3.4% from 4.3% in the June report. Traders believe that sugar production in India from the key growing regions is expected to increase by about 9% this year and that this would help boost total production in the country to near 17 million tonnes as compared with 14.7 million tonnes last year and compared with trade expectations before the start of the season near 20 million tonnes. When production was expected to be 20 million tonnes, the USDA had predicted that India would still need to import near 2.5 million tonnes. June monsoon rains were the lowest in 83 years but monsoon rains have revived for the first two weeks of July with the first week coming in just 8% below average. Traders will continue to monitor the monsoons closely.
TODAY’S GUIDANCE: Short term buying support for October sugar comes in at the 17.42 and 17.27 with 17.90 and 18.59 as next upside targets.
