Softs

Sugar: Oversold and due for a bounce but the trend is down

Posted 03/22/2017 3:21PM CTJoe Nikruto

This week’s commentary finds a May sugar futures contract that remains under pressure.  Seven weeks of lower highs and lower lows has brought the May contract from 21.45 down to this week’s low of 17.02.  That is almost 5 full points off the price and a 55,000 contract decline in open interest.  Interestingly, non-commercial funds are still long over 100,000 sugar futures contracts. Stochastics point to a market that is well oversold and due for a bounce.  One wonders how much lower the market will have to trade to force the funds to capitulate and exit long positions.  Wire service reports point to ideas that the harvest in Brazil is going well. And, deservedly cane production is trumping Asian demand, for now.  Outside markets have not helped as the May crude contract and the May sugar contract have been traveling in tandem, virtually in one direction, lower.  I still suspect that the break is overdone.  However, no amount of suspicion is enough to counteract what you can see on the chart. The trend is down. 

 

May Sugar Daily Chart

 

Joe Nikruto

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."