Sugar prices are in a free fall now at prices we have not seen since July 2010. Last week July 2013 Sugar opened at 17.43 and closed the week at 16.89. A major reason for last week’s drop was that it was reported the output nearly tripled in April at the main growing area of Brazil, who happens to be the world’s biggest producer as well as the world’s third largest consumer.
Speaking of consumers, here are the worlds largest based on the average consumed in 2009-2012 (Source: American Sugar Alliance).
(Thousand Metric Tons/Year)
- India 24,000
- China 14,600
- Brazil 11,733
- USA 10,171
- Russia 5,649
- Indonesia 5,050
- Mexico 4,341
- Pakistan 4,317
- Egypt 2,867
What is amazing here is the in the list above the combined usage of the top four is triple that of the next five. And look at the drop from number four to number five.
Proceed to Page 2 for the latest COT Data...
Now this past week big money action was bearish. In the Disaggregated COT we see Producers dropping net shorts now at -162,540 contracts and Managed Money added to net shorts now at -47,147 contracts. And wouldn’t you know it Swap Dealers added to net longs now at 189,573 contracts. Go back 15 years when Swap Dealers were really not part of sugar, where would sugar be trading? If we see a continued bearish posture develop in the COT like we have seen before, we could see sugar head to the lows hit in May 2010 at 14.00. The large world supplies may help.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
Looking at the daily chart you can see the market in a strong trend with ADX at 45 and a large increasing DI Differential. Market is in deep oversold territory and MACD is bullish. Watch for a correction back above 17.00 and a move down to test 16.50. Need to see a close below 16.80 first. See how the market dropped below 20 the week of Oct. 22, 2012 and never looked back.
Click to enlarge.
On the weekly chart ADX reflects a strong trend and in deep oversold territory.
Have a prosperous trading week.
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