Sugar 11 | Technical Outlook 21-11-2012

Sugar 11 still trading below downward trend line until an upward breakout occurs, the commodity is still deemed to be in a selling mode. The decline that started in late July, evident from the series of lower highs, with the latest at 20.35, remains intact.

Nonetheless, the last 2 candles which close above 19.48  support level suggest that buyers are not letting up. Buying will gather pace if the commodity break above the downward trend line and a violation of 20.35 resistance level should confirm the buying strength. Further resistance is at 21.00 and October high at 22.00.

However, if price fail to break downward trend line and close below 19.48 will extend selling pressure. Support are expected at 19.00 round number and previous low 18.75.

Sugar 11 | Technical Outlook

Sugar 11 failed to close above upward trend line and making a new 4 month low as last week closing price at 19.35. The violation of the 19.48 level is critical, because that is a four month low. Which indicate price will go down further.


For now, we keep our near-term bearish bias view.  Note that its daily RSI is still far from reaching the oversold territory as it closed at the 35-pt level last Thursday.

From the current level, look for immediate strong support at 19.00 psychological mark followed by the 18.50 level. To the upside, resistance can be found at 19.48 which is previous low followed by 20.35 level.

Raw Sugar Tumbles to Three-Week Low; More Supplies Anticipated

Raw-sugar futures retreated Tuesday as investors closed out bets that prices would rise ahead of the latest status report on Brazil's sugarcane crush.

"[The market is] expecting a large crush number out of [industry association] Unica and I think that's not helping things for sure," said Michael McDougall, a senior vice president at Newedge. Unica publishes a closely watched biweekly report on the progress of top producer Brazil's sugarcane crush, as well as sugar and ethanol production.

Raw sugar for March delivery on the ICE Futures U.S. exchange settled 0.41 cent, or 2%, lower at 19.65 cents a pound, the lowest settlement since Sept. 28.

Traders expect this week's Unica report to show that the pace of the crush increased for the first half of October, as weather has been favorable for harvesting and transporting the cane. More sugar would add to the global surplus of the sweetener, likely pressuring prices further.

"There is a glut of sugar on the market right now," said Sterling Smith, a market analyst at Citibank.

Sugar's losses Tuesday were "compounded by the general risk-off attitude, along with the stronger dollar and weaker equity markets," Mr. Smith added. "It's already weak so that sends the buyers onto the sidelines."

Market participants point to 19.5 cents a pound as the next important support level. But "I think we might test lower," Mr. McDougall said, citing the market's inability to hold the 20-cent level over the last two weeks.

"There is probably going to be some stop-loss selling and fund liquidation if [futures break 19.5 cents]," Mr. Smith said.

Sources from: The Wall Street Journal (Writer: Alexandra Wexler)

Sugar 11 | 22-10 technical analysis

Sugar 11 enter consolidate phase (Yellow Box) for the past 5 trading days after the huge drop out from previous consolidate phase. The price is also dropping out from upward trend line, and now the upward trend line are acting as resistance. It testing the upside of the box which is also upward trend line for several times.

The consolidation phase is expected to come to an end when the Upward trend line is violated. Immediate resistance at 20.85, following by 21.24 Fibonacci retracement.
Bearish movement may continue if the price fail to close above the yellow box and upward trendline.
Support can be found at 19.67 which is previous low and next support at 19.48, 0% of fibonacci retracement.

As for short term 60 min technical analysis, it is in line with daily chart where the price just breaking out from downward trend line last week and it hit and rejected by 20.47 fibonacci retracement. We notice that the price are trade outside of yellow consolidation box and it may indicate bullish sign if the price didn't close back into the yellow box. The upward can be affirmed if the recent high of 20.47 is broke.

1st resistance at 20.47 following by 20.72 or daily resistance at 20.85.
Support can be found at 19.67 and next support at 19.48, 0% of fibonacci retracement.

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India sugar extends losses, hits three-months low

Indian sugar futures extended losses on Friday to hit their lowest in three months on weak demand and higher quota, as supplies from imports hurt the sentiments further. By 1040 GMT, the key November contract on the National Commodity and Derivatives Exchange was down 1.20 percent at 3,286 rupees ($60.85)per 100 kg, after falling to 3,285 rupees earlier in the day, the lowest level since July 20.

At the Kolhapur spot market, in the top sugar producing Maharashtra state, sugar dropped 25 rupees to 3,500 rupees per 100 kg. "Retail demand is not improving as per expectations. Mills slashed price by 50 rupees (per 100 kg) in tenders," said Harakhchand Vora, vice-president of the Bombay Sugar Merchants Association.

The government has allowed millers to sell 4 million tonnes of non-levy sugar in October and November, higher than the average monthly allocation of around 1.7 million tonnes. Non-levy, or free-sale, sugar is sold by millers in the open market, but the quantity each mill can sell is fixed by the federal government. The government on Wednesday said mills should sell the entire allocated non-levy quota before November 30 and the unsold stocks would be converted into levy sugar. Levy sugar is the quantity that mills sell at subsidised rates to the government for the public distribution system.

Indians will celebrate Dussehra next week and Diwali in November. Demand for sugar rises during these festivals. The country's biggest sugar refiner Shree Renuka has started selling imported sugar from its Haldia refinery. India's sugar output in the 2012/13 year, which started on October 1, is likely to fall to 23.5 million to 24 million tonnes, from 26 million tonnes a year earlier.

Sources from: Reuters 2012

Sugar prices defy rising supply surplus

Sugar prices are defying mounting surpluses on the back of large crops in Brazil, Thailand and China, keeping the commodity stuck at a historically elevated range of 19-22 cents a pound.

The mood in the industry has remained cautious as it gathered in London for its biennial Sugar Week, due to the uncertainty over the effects of the Brazilian weather as well as the country’s biofuel policy, which in effect puts a floor under the market.

These factors mean that although the sugar industry faces its third consecutive annual supply surplus, prices have failed to fall far below 19 cents a pound this year. Brazil is the world’s largest sugar exporter in the world, accounting for over 40 per cent all exports.

Farideh Bromfield, head of research at ED&F Man, one of the largest traders of soft commodities, said the mood at this week’s industry gatherings had been “downbeat” despite the encouraging longer term talk.

The market seemed to be hamstrung due to the uncertainty over the Brazilian output figures for the current crop season due to the unpredictable weather over the past few weeks. “We need to get over this hump for prices to go anywhere,” said Ms Bromfield.

Apart from the weather, the so-called “ethanol parity” – the price level at which it becomes more profitable for Brazilian processors to turn their sugarcane into ethanol – is providing support.

The ethanol parity is at about 17 cents a pound, and with the Brazilian government widely expected to increase the amount of ethanol mixed into petrol from 20 per cent to 25 per cent next year, “the Brazilian mills are likely to hold off selling”, said Robin Shaw, analyst at brokers Marex Spectron.

The short term uncertainty comes amid a bullish long term backdrop, with demand for sugar in developing countries forecast to rise as their economies grow. Jonathan Kingsman of consultancy Kingsman, which was bought by McGraw-Hill’s price reporting agency Platts this month, forecast world sugar consumption to grow by 32m tonnes by 2020, an increase of 2.2 per cent a year.Meanwhile, the price of white, or refined sugar, which has remained relatively high, is also behind the reluctance of raw sugar traders to take bearish positions. On Thursday, raw sugar fell 1.3 per cent in New York to 19.90 cents, down 15 per cent from the start of the year.

Sources from: The Financial Times Limited 2012