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Sugar Fundamentals Read Bullish, Chart Action Markedly Bearish

Posted 07/03/2019 7:30AM CT | Joe Nikruto

This week’s comment finds the October sugar futures contract under pressure technically.  Fundamentally, the bullish case is well known and on display in the wire services. Hightower today, laid out how sugar cane continues to be converted to ethanol in Brazil. Also, dryness in sugar producing regions in India could likely impact totals for the year there.  The wild card in this well-defined fundamental picture is near record large deliveries of physical sugar against futures contracts, according to Hightower. For  long time sugar watchers this is a familiar scene. Projections for less sugar in the future countered by ample sugar supplies in the present.  Pressure from the energy markets rolling over today did not help buoy sugar prices. At last glance crude oil was down well over 2 full points on the day.  Technically, sugar has been bouncing around the 50-day moving average, 12.49.  The October sugar futures contract appeared to be on the verge of an upside breakout but is now taking out swing lows three sessions later. We will see for sure in coming sessions, if sugar is just under the influence of this large physical delivery or a new down-trend is in the works.

Sugar Oct ’19 Daily Chart

Sugar Oct '19 Daily Chart

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Joe Nikruto

Senior Market Strategist
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."
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