This week’s comment finds sugar futures marking time. The March contract is almost smack dab in the middle of the range sugar has carved out since the lows in late June. 13.42 and the swing high posted on August 1, 15.84. Sugar fundamentals continue to weigh on the market. Technicals which were looking constructive a few weeks ago have since eroded. One look at the chart shows sugar has been treading this ground for some time. Funds continue to add to their short position of about 82k contracts as of the September 26 COT reading, an increase of about 10k contracts. Hightower group research this morning pointed out that European production forecasts have increased as much as 25% as European Union output quotas have ended. As this news has been digested, sugar has found support. The last few days of higher prices have helped March sugar alleviate the oversold technical condition present on the chart. With the 18-day moving average looming overhead at 14.46, we could well have an answer to whether new lows may be in the offing. An inability of March sugar to take out the 18-day moving average could signal an imminent move lower. With only 86k contracts short the funds have ammo to press the downside should sugar continue to look heavy.
Mar ’18 Sugar Daily Chart