Clearly the trend has been lower in sugar for the last two years with futures currently trading nearly half the value they were trading at 25 months ago. It does appear that we are consolidating just above the 16 cent level and we may have found an interim bottom. Within the last few weeks futures have shown signs of life and have traded above the down sloping trend line that has capped any advances for the last two years. What if we are shifting from a bearish market to a bullish market? I drew red horizontal lines on the chart below to identify consolidation levels on the weekly chart. My first objective comes in just below the 50 day MA (red line) below 18 cents. My suggestion is to scale into bullish trade in 14’ contracts looking to add length as the market proves you are correct.
There is very little in the news specific to sugar (aka Azucar) that has been market moving so for the most part sugar has been looking for guidance from outside markets. The COT is not screaming anything bullish just yet with funds building a net short position. The weather for now remains a bearish force. The Brazilian Real and other major emerging market currencies have continue their recovery from multi-year lows providing mild support. Exports may be less aggressive in major sugar producing countries if these currencies continue to recover. We are experiencing a down-tick in planted acreage in Eastern and Central Europe in addition to declines in Russia and the Ukraine.
As long as the tug of war continues expect a base building process.
In the last two months sugar has consolidated in a 1 cent trading range. My suggestion is to accumulate 14’ contracts when near the lower end of the recent range just under 17 cents/lb. Clients have started to buy multiple future contract months in 14’ and I am also open to buying just out of the money calls.
Current Sugar prices are as follows:
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As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… you can reach me at: email@example.com or 954-929-9997