This week’s comment finds the March sugar futures contract in wait-and-see mode. After a dramatic rally off the lows in January, the March contract has been marking time building a well formed flagging pattern. Fund traders were forced into new long positions toward the end of January, as the March contract moved above 21.20. According to Reuters COT data, the funds are currently long a healthy but not burdensome 147,000 contracts. 20.40 and 20.04 are levels that, should they not hold, could force the funds to trim their long position. So, upon closer inspection, we see that there is a bit of drama to be found in typically reserved sugar. The trend is up, but within spitting distance of sideways. Funds have the start of a healthy position. Will they stand pat in the face on weakness? The needs of Asian purchasers should remain the dominant fundamental, but where and when will they ramp up buying? Will sugar begin to build another leg higher without testing the resolve of traders with a move under 20? The 50 day moving average comes in at 19.82 in the March futures contract and presents a good risk management level for even the longest term traders. The chart and fundamentals both say that sugar is likely headed to test the highs. But should the tide of fund purchasing ebb due to technical damage or weakness resulting from a well-worn fundamental story, 18.00 could be in play.
Series 3 Licensed
Senior Market Strategist
Joe Nikruto attended Indiana State University and DePaul University in Chicago with a major concentration in economics. "It was during college that I got a job as a runner at the Chicago Board of Trade. I was immediately hooked," he says.
He adds that he also enjoys futures trading because anyone can do it. "Your success depends on how you handle the risk and how much work you are willing to put in. You don't need a big-time Wall Street connection, or a degree from an Ivy League school to get started. Your success largely depends on you and what you put into it."
In 1992, he started as a runner and back office clerk for a very large futures commission merchant (FCM). He moved up to pit clerk, then research associate working on the trading floors directly for a grain and livestock concern based in Memphis. He spent time on various trading desks for a large retail FCM and then became Series 3 registered in 1997. He also helped develop an online trading platform and consulted on development and trading of mechanical trading systems. He has always worked to assist his clients with all types of trading-from option strategies and hedging to complicated mechanical trading systems.
His advisory background includes Floyd Upperman, McMaster, Walter Bressert, Ken Roberts, Tech Guru, Hightower, Helms and Barry Rosen.
As for his involvement with RJO, Nikruto says, "R.J. O'Brien has been in operation for more than 100 years. That is a century of supporting customers. You have to be doing something right for folks who use futures to choose to do business with you for that long."