This week’s comment finds the May sugar futures contract continuing its downward slide. Negative fundamentals that are well discounted and an oversold chart should be conspiring to provide the May sugar futures at least a chance to bounce. However, this morning’s early bounce was met with selling that didn’t let up for the whole session. After rallying 30 points early the best the May contract could do was a 10 tick loss on the day. One fundamental that isn’t getting that much traction from the usual outlets is China’s decision to make available for export large quantities of High Fructose Corn Syrup. While China will continue to import sugar, they will be turning some of their large stock piles of corn into sweetener and selling it to trading partners in Asia. This could have an impact on the amount of sugar imported into these countries. News from the soft drink world in the last few days suggests yet another replacement for sugar in the pipeline. Coca-Cola and Cargill are partnering with a European “food ingredient” company to bring a Stevia derived sweetener to market in the next year. While not a soft drink expert by any measure, my opinion is that even though most US soft drinks are sweetened with HFCS, an effective low or zero calorie sweetener in soft drinks could speak to sea change in the processed food space. Technically, it is hard to say where the bottom is. Interestingly, the fund trader category is still long as of the last reporting, near 100k contracts. This seems like a lot of contracts holding out on the long side in relation to the relentless downward move we have seen in the May contract. Will the market force the fund trader to capitulate with another leg lower? The commercial category of trader is increasingly less short and it will be interesting to see how much lower the May contract could have to go to find willing buyers. Certainly, the May sugar futures contract is oversold and due for a bounce. But, the trend is down and the funds are still long. Hard to view that as a bullish circumstance.