The sugar futures market has been in a slow motion slide for nearly two years. This follows the market axiom that nothing beats low price like low prices and the expected surplus this year further adds to those concerns. That being said, the sugar market is trading at prices not seen since July of 2010. Furthermore, the sugar market’s seasonality should coincide with commercial long hedgers taking advantage of these multi-year low prices. Finally, the sugar market’s inherent volatility tends to reward forward thinking traders as this market can quickly leave its participants playing catch up.
Beginning with Moore Research’s seasonal analysis of the July sugar futures, you can see that the market typically bottoms near this time of year. Seasonal trends don’t always start right on time. Independent research shows that the combination of commercial trader action combined with the proper seasonal widow is typically more effective than either analysis method on its own.
When we combine their seasonal analysis with our normal Commitment of Traders (COT) analysis, we get this.
Notice in particular, the green shaded box. Based on recent commercial trader action and the forward seasonal forecast, we believe July sugar prices will bottom out near here before rallying back towards the .14-.15cents per pound area. Finally, this may be what the market needs to begin showing some signs of a structural low.
This material has been prepared by a sales or trading employee or agent of Commodity & Derivative Advisors and is, or is in the nature of, a solicitation. This material is not a research report prepared by Commodity & Derivative Advisors’ Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Commodity & Derivative Advisors believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.