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

Sugar 11 | Downward pressure still strong?

Sugar 11 Drop further after break down from consolidation phase which last time we mention. The price drop to low at 19.81 and rebound to 20.23 yesterday. 

Since the price rebound before it reach previous low at 19.65 and 19.48 which indicate bullish sign. The trend change to bearish once the price drop and close below 19.81.

As from the picture, this is a 60 min chart, the price found support at 20.00 big round number and trading within the channel. We looking for long opportunity as long as the price trading within the channel or above 20.00.

Based on RSI at 46.21, which is in the middle, this may indicate a short term side way market may coming.

The direction change once the price close below the channel and 20.00 big round number, 1st support is previous low at 19.81. 1st resistance at previous high 20.30. The price may trade higher after break and close above 20.30, 2nd resistance at 20.50 which is also upside for the channel.

Sugar to gain competitiveness over corn sweeteners

Sugar prices look set to lose more of their premium over prices of corn-based sweeteners, Czarnikow said, signalling limited room for grain processors such as Cargill to lift prices in imminent talks.

Makers of high fructose corn syrup, a group which also includes the likes of Archer Daniels Midland and Tate & Lyle, last year achieved strong rises in prices, of some 10-15%, in annual talks with customers, such as drinks giants PepsiCo and Coca-Cola.

However, as the companies prepare for this year's round of talks, for 2013 prices, set to begin later this month, Czarnikow flagged the falling price of sugar compared with high fructose corn syrup (HFCS), whose manufacturing costs are being underpinned by elevated corn prices.

In contrast, sugar prices have been undermined by a recovery in cane production in the likes of Australia, Brazil and China, besides sugar beet in Russia, leaving the world with a production surplus of 7.1m tonnes in 2012-13, on Czarnikow estimates.

'Prices may converge' 

"Since 2008 high sugar and low corn prices have driven industrial consumers towards corn sweeteners," the merchant said, flagging a rise from historic levels of 3.2 cents a pound in 2007 to 15 cents a pound last year.

"It has since fallen to around 7.6 cents a pound currently."

And it stands to fall further, including in the Mexican market which is key to US HFCS producers, which have used exports south to offset the impact of a slowdown in domestic use of corn sweeteners as health-conscious consumers switch from fizzy drinks to fruit juices and water.

"In Mexico, the imminent start of the harvest, which is expected to yield the biggest crop in the last four years, could see prices converge," Czarnikow said.

US Department of Agriculture staff this month estimated a bigger and better quality Mexican cane harvest fostering a 4.1% rise to 5.25m tonnes in Mexico's sugar output in 2012-13.

Chinese dynamics 

In China too, where corn-based products account for one-third of sweetener demand, as measured by calorific value, sugar may regain market share if its values fall as market dynamics suggest.

"With a bigger cane and beet crop anticipated in 2012-13, sugar prices should fall," Czarnikow said.

"If sugar prices fall there is the potential for a rise in sugar demand at the expense of corn sweeteners," with improved domestic production also set to foster a halving to 1.5m tonnes in China's sugar imports.

ICE Sugar Plunges

Raw sugar futures on ICE plunged almost 4 percent on Thursday as funds and speculative investors continued to liquidate positions amid talk that importers may be cancelling cargoes. Coffee hit one-month lows and cocoa plumbed levels last seen in July amid plentiful supplies and sluggish consumption.

Reinforcing concerns about weakening demand was widespread talk about sugar washouts - where buyers give up the obligation to take delivery by paying a penalty - which centred on China and India, dealers said. Buyers may be walking away from hundreds of thousands of tonnes worth of contracts after sup ply concerns that sent prices a s high as 24 cents a lb in mid-July dissipated. Prices have since plunged 15 percent.

"This is a technical breakdown precipitated by rumours of washouts not yet confirmed. Washout talk generally filters down after the fact, but where there's smoke, there's fire," said Michael McDougall, a vice-president for brokers Newedge USA. Dealers also cited the absence of China as further evidence of weakening destination buying. Imports by the world's largest sugar consumer may drop by as much as half in the season to September 2013 on rising domestic output, competition from substitute sweeteners, high inventory and a slowing economy, a Reuters poll showed on Thursday. March raw sugar on ICE settled at a one-month low, down 0.81 cent, or 3.81 percent, at 20.45 cents a lb, after selling accelerating as prices pierced a string of short- and long-term moving averages.

Dealers suggested further declines will encourage more liquidation by speculative and fund longs. "Lower import demand overall, especially from Russia and China, remains a drag on this market, and production growth elsewhere will still lead to another surplus globally," Kona Haque, Macquarie analyst, said in a market note. December white sugar on Liffe fell $22, or 3.70 percent, to $568.4 per tonne. December arabica coffee futures on ICE fell 1.65 percent to $1.6075 per lb, their lowest level since September 6.

Dealers said a run-up in prices earlier this month encountered decent Brazil selling above $1.80 per lb with the market currently well supplied. ICE certified arabica stocks continued to climb and stood at 2.253 million bags as of October 10, following a prolonged increase from barely more than 1.5 million bags in early May. Robusta coffee futures on Liffe fell, with November settling 1.05 percent lower at $2,076 a tonne.

After piercing its 100-day moving average, ICE December cocoa futures fell to lows last hit on July 31, with the next technical support - its 200-day moving average at $2,341 - preventing further losses. December recovered some ground to settle down $21, or 0.9 percent, at $2,351 per tonne. March cocoa futures on Liffe settled down 16 pounds, or 1.04 percent, at 1,527 pounds a tonne.

SOURCES FROM: REUTERS 12 Oct 2012

Sugar 11 drop out from the box

The sugar 11 was drop out from the consolidate phase yesterday and closed below the 21 support level. The bearish engulfing showing the strong selling pressure and the next support level 20 seem vulnerable even though the recent uptrend still intact. We would rather choose to wait for the further confirmation of either short or long signal. The RSI show the sugar price is now moving into the downtrend territory and all we have to do is awaiting for the further confirmation break down from the 20 support area.

Coffee and Sugar Down

Arabica coffee futures fell to a one-month low in heavy volume on Wednesday as crop flowering in top grower Brazil combined with the widening December/March spread weighed on the market. Raw sugar eased dealings after Brazil's harvest update came in line while cocoa also fell, pressured by expectations of weak demand.

The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, was slightly lower amid concerns about a sluggish world economy, though climbing oil prices due to concerns about supply in the Middle East lifted crude. December arabica coffee futures on ICE dropped 1.85 cents, or 1.1 percent, to finish at $1.6345 per lb, the lowest settlement since September 7 for the second straight day.

"The Brazilian harvest is a very big one. There are also prospects for big crops from Central America," said Stefan Uhlenbrock, a soft commodities analyst with F.O. Licht. Traders said timely flowering of coffee trees in Brazil's coffee belt was better than many had expected, boding well for the 2012/13 crop in the world's biggest producer and adding market pressure.

The spreading widened the discount of the December contract to March The spread closed at a discount of 4.40 cents per lb, the widest in nearly 11 months, from 4.20 cents the previous session. This spreading boosted the session's volume, bringing total volume to around 24,000 lots, up nearly 20 percent from the 30-day average, preliminary Thomson Reuters data showed.

November robusta coffee futures finished up $32, or 1.6 percent, at $2,098 a tonne. Sugar eased in thin dealings, unable to hold the previous session's gains as producer selling weighed, after it failed to break technical resistance at 21.77 cents per lb on Tuesday, following Brazil's industry association harvest update.

ICE March raw sugar futures finished down 0.21 cent, or 1 percent, at 21.26 cents per lb, trading below last week's eight-week high of 21.77 cents. The contract traded on either side of its 100-day moving average around 21.33 cents, as its done for more than a week.

"Sugar is stuck, in the last five days we've traded around a 70 point range," said a London-based broker. "There's some producer selling, mostly against July." December white sugar on Liffe fell $7.90, or 1.3 percent, to close at $590.40 per tonne. Cocoa futures also moved lower with the commodity complex.

March cocoa futures on Liffe ended down 25 pounds, or 1.6 percent, at 1,543 pounds per tonne, weighed by expectations that European grind data due next week will be down. ICE December cocoa closed down $45, or 1.9 percent, at $2,372 per tonne, remaining above its 100-day moving average at $2,359.

Sources from: Reuters 11 Oct 2012

Sugar 11 | Still In Consolidation Phase

For the past 6 days, the Sugar 11 has been consolidating after broken out from previous resistance which is at 21.00. However, Sugar 11 is still in a good position to break above the 21.77 immediate resistance in order to extending its rebound that started from 1/10/12’s upside breakout..

From the current level, look for an immediate resistance at the 21.77  level, which is the resistance level of the recent consolidation and 50.0 % of Fibonacci retracement.

Next resistance is seen at the 22.30 which is also 38.2% Fibonacci retracement. To the downside, we are eyeing an initial support at the 21.00  level, followed by the 20.00 psychological mark.

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