Sugar has seen a consistent drop in its prices, on the heel of a large production glut, exceeding forecasts of most analysts – according to Bloomberg:
Global production will exceed demand by 10 million metric tons in the 12 months ending in September, equal to about a year of U.S. consumption, according to Singapore-based Olam International Ltd., which trades and processes commodities in 65 countries.
Prices that surged to a 30-year high in February last year spurred farmers to plant more cane and beet, expanding global production to a record this season. Futures traded in New York slumped 9.9 percent in the past three weeks on mounting concern about another glut next season. Thailand, the world’s second- biggest exporter, may ship the most supply ever this year, the country’s Office of the Cane & Sugar Board said on April 11.
We’ve seen very bearish news coming from different news sources on sugar. Production is up, and opposite of the bull market in the early 1970′s, suppliers are actually setting policies to increase their exporting of sugar. According to the CFTC, money manager’s “bets on rising sugar prices fell the most in more than three years.”
The market has discounted these factors early, as we see continual decrease in sugar prices this week, without significant technical market corrections, or coup de theatre news feeds (bullish). Last year we saw sugar dip into the $13-16, price range, if we see the trend falter below $20.28 -20, it may fall into the “bearish”, phase (if not there already). A revolving eye is being kept on the intraday volume, which can break any support or resistance efforts.