One of These Days, Sideways is Going to End

February 22, 2017 3:19PM CST

Sideways... Shoot... May sugar futures contract is still only sideways... Every time I think I'm going to wake up to a clearly defined trend, still only sideways.  Each time I look around, the bands move in a little tighter. Oftentimes, when faced with sideways market action or the fatigue that comes with attempting to maintain a bias in the face of a non-trending market, a trader has two choices. Offset the position or revisit the fundamentals, well known though they may be, and attempt to gird oneself against the waves of monotony washing over the trade. In the last two weeks, the sugar market has attempted to break out to both the upside and the downside. Both breakouts failed and here we find the May sugar futures contract right where it was when we started 2017.  Asian demand, in my opinion, is the fundamental that will reign supreme.  The potential for weather related production challenges looms. The idea that South American sugar will arrive on the market without any disruption or the potential for disruption seems optimistic.  With the lowest stocks in 7 years there would appear to be very little room for any global production shortfall.  This, combined with hot money pacing the sidelines waiting for a fundamental story they can turn into a massive technical move makes me believe that the path of least resistance is higher. 

 

Sugar Daily Chart

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