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.

Sugar 11 Contract Specification