Strong demand from importing nations and huge long positions from hedge funds propelled sugar to more than 18¢ per pound earlier this year, says James S. Cordier, chief trader at Liberty Trading Group. “There was a lot of talk about 22, and 24 and 30¢ sugar, and at 16¢ it sounded like a buy.” But purchases by China, India, Pakistan and Russia evaporated in April and May, right when Brazilian farmers went to market, and in mid September, world sugar dropped back near 11.50¢. “It was kind of a perfect storm,” says Cordier, who picks a range of 12¢ to 14¢, for sugar in October.
“I haven’t seen a reason to buy it,” says Peter A. Thomas, senior broker at RJO Futures, adding that supply is building. In a demonstration of its commitment to energy self-sufficiency, production leader Brazil planted 1 million new hectares of sugar cane. “They had the army out there planting sugar cane,” he exclaims, adding sugar will bottom out near 10.99¢, and hit 14.61¢ for a high.
Boyd Cruel, senior softs analyst at Alaron, expects speculative long liquidation to continue through October due to lack of demand and lower energy prices. “The only thing that could turn it around right now is if we see demand from Russia, India and or China.” Cruel expects March sugar to retest support at 12¢ and test resistance at 14¢ during October.