- Sugar within the red for Feb after rallying from conclude-Sept by Jan
- Sweetener won 22% in four months; now Feb scamper now not up to 1%
- Some analysts utter output is building, and this would possibly perhaps occasionally perhaps well furthermore weigh on sugar costs
- Others predict a deeper technical scamper to permit the market to ‘recharge’
After a candy four-month high-tail, these long sugar are seeing red for the first time in February as handsome or active cane harvests in Brazil to Thailand trigger revenue-taking among merchants fearing elevated output.
February's setback in Novel York-traded uncooked sugar futures is unassuming: With honest two classes left for the month, the market is off now not up to 1%. That too after a rally of 22% from conclude-September by January that came with cherry topping within the create of a six-year high of 21.82 cents a lb.
In Thursday’s exchange, sugar futures front-month contract for March settled at 21.58 a lb. As of this writing, the commodity trades marginally elevated, at 21.68 a lb.
So, is that this scamper honest a bump or is the candy high-tail about to conclude?
Charts by SKCharting.com, with recordsdata powered by Investing.com
At the outset, there doesn't look like too considerable that can severely disrupt the momentum of the previous four months or send the market entirely within the reverse.
But, some analysts are cautioning that manufacturing is building. Others are citing the doable of an additional technical scamper before bulls can regroup on the decrease degree to price elevated.
Output-practical, handsome growth is viewed within the slice in predominant rising worldwide locations Brazil and Thailand, acknowledged Jack Scoville, chief slice analyst at Chicago’s Imprint Futures Neighborhood. He provides:
“Thailand expects to export 9.0 million hundreds sugar within the unusual slice year, 7% extra than closing year. Suggestions are that the market has furthermore priced in manufacturing losses in India and Brazil.
Excellent-searching manufacturing prospects are viewed for vegetation in central and northerly areas of Brazil, however the south has viewed drier climate. There would possibly perhaps be downside that the rainy areas will defend too moist and delay the harvest and dilute the sugar concentrations within the cane in central areas. The harvest is active in Thailand. Australia and Central The US harvests are furthermore active while European manufacturing is expected to be reduced again this year.”
India, the area's second-biggest sugar exporter, is possible to make 34 million tonnes of the sweetener in 2022/23, down 7% from the previous forecast, a main exchange physique acknowledged on the conclude of January.
The rally from a month within the past became once furthermore helped by speculation that top exporter Brazil would possibly perhaps perhaps perhaps furthermore make less if its energy policy improves ethanol's profitability.
On the charts facet, sugar futures are solid sufficient on day to day, weekly and month-to-month time frames to defend their broadly bullish standpoint, acknowledged Sunil Kumar Dixit, chief technical strategist at SKCharting.com.
However he furthermore cautioned that the market would possibly perhaps perhaps well furthermore retest toughen on the decrease 21-cent degree to search out energy for a push elevated, adding:
“On daily foundation chart is type of finished with momentum distribution supported by the Relative Power Index at above neutrality of 50 while Stochastics at 77/64 are firmly positioned.
However costs would possibly perhaps perhaps well furthermore furthermore be anticipating a spoil above the symmetrical triangle resistance of 21.75 cents. The varied is a retest of toughen at $21.40 before uptrend resumes with targets of 23 cents and 24.10 cents.”
Disclaimer: Barani Krishnan makes utilize of a vary of views outside his hang to bring vary to his analysis of any market. For neutrality, he most steadily presents contrarian views and market variables. He doesn't defend a topic within the commodities and securities he writes about.