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July sugar consolidating for next leg lower or are funds all chased out?

Posted 04/19/2017 10:03AM CT | Joe Nikruto

This week’s comment finds July sugar futures continuing to consolidate.  Midweek price action showed the July contract giving back almost all of the previous days outside up move, closing at 16.50, well into the lower half of the previous day’s range.  A surprisingly large number of fund contracts remain on the long side according to the last COT report.  How low this market will have to go to get the holders of these contracts to capitulate cannot be known.  But, the chart is indicating that the July sugar futures contract is consolidating in preparation for the next leg lower. Without some change in the fundamental situation, discounted though it is, or until the July sugar futures contract can find a way to close over the 18-day moving average more than one day in a row the path of least resistance is lower.

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."