Corrective Rally in Sugar or Price Floor Located?Posted 09/26/2019 7:41AM CT |
This week’s comment finds the now prompt March sugar futures contract rallying in convincing fashion. With the size of the fund trader short position, March sugar could travel a bit of distance to the upside before losing steam. The level of short interest we have seen on the part of the fund trader is often followed by a cycling out of those short positions. This getting to the sidelines/ booking profits is enough to hold sway over price action for days and even weeks. Those who have been watching sugar for any length of time will agree that it can be markedly unprofitable to stand in the way of these moves. I do not believe that sugar has the fundamentals to hold a change of direction and establish a new uptrend. But if the funds keep covering shorts, and they have plenty to cover, the fundamentals will take a back seat for a time. Wire services continue to advertise the future math needed to estimate potential supply deficits. It could very well be that production will be lacking in 2019/2020. China could also be on the bid lining up imports. These are fundamentals that will become obvious later. For now, we only have the chart to go on. The chart for March sugar points higher.