RJO FuturesCast

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Corrective Rally in Sugar or Price Floor Located?

Posted 09/26/2019 7:41AM CT | Joe Nikruto

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.

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."