
October ’20 Sugar futures spiked up yesterday morning (6/24/2020) before ultimately reversing into a downside break-out. The rally in sugar from the panic sell-off lows has been impressive considering the demand destruction and potential for a sizeable crop from India. It was most likely driven by bargain buyers and the return of strength in energies. However, it seems that rally may be coming to an end. This can be a very trend friendly market as when it picks a direction it tends to follow through continuously…until it doesn’t. Sugar prices have been trading mostly side-ways since the last new high on June 10th. This suggests bulls have been running out of steam.
From a fundamental perspective, there is the possibility of a production surplus with India likely having a sizeable upcoming crop, which is bearish. From a technical perspective, today’s reversal/downside break-out is a strong bearish indicator. Should sugar prices close below support it is likely the trend will change in favor of bears.
