The market saw an impressive run higher yesterday, and the upside break-out leaves the October futures at contract highs with 18.60 as the next upside swing target. The impressive technical action has been supported with positive supply news from India and hopes for better import demand from Russia and China for the season just ahead. Nearby sugar futures closed sharply higher on the session yesterday and managed to move to their highest level in three years. Overnight, October sugar extended its rally by trading to fresh contract highs. There are not many new technical targets overhead except for the 2006 highs at 19.73. A move above this level, if it occurs, would mark the highest price for nearby futures in 28 years. News of tight stocks and lower production for India and a surge of positive influences from outside market forces including strength in crude oil and active buying in a wide range of commodity markets from fund traders, are helping to support the market. Indian officials from the northern state of Uttar Pradesh (which represents nearly 40% of the nations total cane crop) indicated that production is likely to fall by at least 500,000 tonnes due to the poor rains. India’s sugar stocks on July 1st were 7.6 million tonnes, down 55.6% from last year. Traders see ending stocks for the 2008/09 season near 4 million tonnes, down from 10 million last year. Ideas that rain could slow the harvest in Brazil for next week was also seen as supportive. After another beet test, Russia’s Sugar Producers Union lowered its production forest to 3.0 million tonnes for the coming season, down from a previous estimate of 3.1 million and down from 3.5 million this past season. Open interest jumped to 736,159 contracts, up from 730,464 the previous session and a new high for the month, a positive technical development.
TODAY’S GUIDANCE: The market remains in a solid uptrend with the next key technical target at 18.60 for October futures and then 19.73 for the nearby futures. Short term support comes in at the 18.09-18.02 level.