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

March 22, 2017 3:21PM CDT

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


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.