Softs

Sugar Rally Stopped, Market Races to New Lows

Posted 05/31/2017 1:36PM CTJoe Nikruto

This week’s comment finds the July sugar futures contract with no bottom in sight. In a nutshell, increased supply in the face of decreased demand is manifesting on the chart as thwarted rallies and new lows. The rally to the 50-day moving average, on decreasing open interest, had technicians looking at the possibility that sugar had bottomed. The July sugar futures contract traded to the 50-day, 16.58, and found no acceptance at that price level. 6 days later, July sugar is almost 2 full points removed and trading to new lows for the move. Wire services abound with commodity trading banks, and other commodity related concerns, calling for even greater surplus of sugar coming down the pipe courtesy of increased production in the major producing nations. The Hightower group highlighted this week that without some weather disruption there is little chance for a sustained rally. One caveat, COT traders are seeing that the commercial category of trader is getting rather long. The commercial trader doesn’t always signal an immediate turn in a market that is trending, but it can be a signal that should not be ignored. 14.70 is a previous swing low on the chart from way back in April, 2016. From there, the next support comes in near 13.00.  

 

Jul ’17 Sugar Daily Chart

Jul '17 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."