This week’s comment finds the July sugar futures contract with no bottom in sight. In a nutshell, increased supply in the face of decreased demand is manifesting on the chart as thwarted rallies and new lows. The rally to the 50-day moving average, on decreasing open interest, had technicians looking at the possibility that sugar had bottomed. The July sugar futures contract traded to the 50-day, 16.58, and found no acceptance at that price level. 6 days later, July sugar is almost 2 full points removed and trading to new lows for the move. Wire services abound with commodity trading banks, and other commodity related concerns, calling for even greater surplus of sugar coming down the pipe courtesy of increased production in the major producing nations. The Hightower group highlighted this week that without some weather disruption there is little chance for a sustained rally. One caveat, COT traders are seeing that the commercial category of trader is getting rather long. The commercial trader doesn’t always signal an immediate turn in a market that is trending, but it can be a signal that should not be ignored. 14.70 is a previous swing low on the chart from way back in April, 2016. From there, the next support comes in near 13.00.
Jul ’17 Sugar Daily Chart