06/10/2014 12:10pm CDT
The current consensus on sugar is that continued weakness may prevail in the short term. As my esteemed colleague Joe "sweet tooth" Nikruto, the unrivaled authority on sugar, mentioned in the last eView, there is a band of support at the 16.80 level for the July futures contract. That neckline support, formed in Jan-Feb of this year, has held for the time being. This is providing solace to the overindulgent speculators who can't satisfy their appetite for the sweet stuff. As of this morning, Hightower notes that non-commercial and non-reportable combined traders held a hefty net long position of 164,458. However, the demand picture is murky and if the aforementioned support band is taken out, a rather painful toothache may ensue. I could see a close below 1662, the 8/22/13 low in the July contract, as a catalyst for long liquidation. On the flipside, as illustrated by the chart, sugar is in a 3+ month channel and the lower reaches of the channel are holding for now. The natural point of rebound would be the 1800 level if the channel holds. Thus, in a nutshell, should July sugar fall through the bottom of the channel and close below 1662, look for significant follow through to the downside.If you are inclined towards the upside, buy sugar in this band of support with a stop below the bottom of the channel and the 1662 level. As a backyard beekeeper, and one who hasn't used sugar in over a year, I will have to recuse myself from any further articles on the subject. It's back to "sweet tooth"next issue.
If you'd like to learn more about futures trading or the sugar market specifically, please contact Tarik Husseini at 800-672-0664 or firstname.lastname@example.org.
Jul '14 Sugar Daily Chart
Source: RJO Vantage