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The weak technical action yesterday and a further sell-off overnight leaves the market vulnerable to some increased long liquidation selling from speculators. Fund traders and money managers appeared to be fairly aggressive sellers in many key industrial and economic sensitive commodity markets yesterday. Once the smoke clears, we would have to believe that the Fed and the Administration do not care too much about the US dollar and that this will be considered a supportive force for many commodity markets. The Fed is targeting unemployment and the Administration wants liquidity and is targeting foreign affairs. March sugar closed 53 lower on the session yesterday after a wild 137 point range for the day. The early sharp break was led by fund long liquidation selling early in the session with “less” fear of inflationary concerns for the market helping to spark the selling. Some concerns that the Fed would start programs to pull liquidity out of the monetary base helped spark the knee-jerk reactions. When gold did not fall apart, the market recovered sharply from the lows and moved moderately higher on the session. Once again, there was a lack of follow-through interest in the move and the market settled back to near the middle of the day’s range. Talk that Russia could import near 2 million tonnes in 2010 as compared with 1.15 million tonnes so far this season helped to provide some underlying support. London and New York sugar pushed back down near yesterday’s lows overnight which leaves a short-term bearish pattern. Traders are lowering their Brazil production estimates due to recent rains which have slowed harvest and due to lower than expected yield from the cane. Mexico officials indicated that they will decide on any further import quotas above the 900,000 tonnes announced this week. Traders will monitor actions by India on the current retracement to see when more India imports might occur.
TODAY’S GUIDANCE: Key support levels for March sugar include 22.09 and 21.80 with resistance at 23.58 and 24.10. It will take a move back through resistance to reverse the short-term trend.
