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The sugar market is in an accelerating uptrend and a lack of new interested sellers is becoming a short-term supportive force. India firms are booking new supply due to production deficit for the coming year and ideas that Brazil bookings are tight and a perceived risk that Brazil production could slow enough to show a backlog of orders “if” rainy weather persists has added to the bullish tone. Tight stocks to start the new crop season in India has just added to the urgency for companies to book supply and this is contributing to the lack of new sellers. The forecast for increased rains for later this week in Brazil has traders nervous of a slowdown in production after mostly dry weather in August helped producers catch up on harvest somewhat. October sugar saw aggressive buying from fund traders yesterday and a sharp rally to new 28-year highs and the move through the technical swing objective of 24.13 has left little in the way of overhead resistance until the psychological level of 25 cents. The market managed to shake off bearish outside market influences to trade sharply higher despite weakness in most other commodity markets and a $3.50 break in crude oil. Talk of a production deficit of near 6 million tonnes for the 09/10 season in India alone helped support talk of increased interest in imports from India. Egypt cancelled a tender to buy 50,000 tonnes of raw sugar on the world market due to high prices. While the market has moved to the highest level since early 1981, keep in mind that the highs for late 1980 for nearby sugar futures were above 45 cents. The market is quickly returning to an overbought status with a run of more than 300 points in the last five trading sessions.
TODAY’S GUIDANCE: The market must now move to a high enough level to see a slowdown in demand. Close-in support comes in at 23.46 with 25.04 and 26.23 as next technical objectives. It will take reversal-type chart action to spark much long liquidation selling.
