On Monday, the March09 ICE sugar futures contract briefly crossed the 13 cent mark, closing the day at 12.97 (the session’s low was 12.67). Readers who have been following the weekly notes stressing that sub 12 cent sugar was an attractive entry point were well positioned for this recent move. While this is the highest that the nearby has traded since early November, it is difficult to speculate on the directional moves for the rest of the week. Technicals are pointing to a higher open on Tuesday, extending the January rally. For the last week, traders have been focusing on both supply and demand fundamentals from India, but that is now priced into current futures. We will still focus our analysis on impacts to the supply side, and start to look beyond Brazil and India, focusing on the Thai and Australian crops. Not much precipitation is forecast for Thailand growing regions over the next 7-10 days, while the Queensland belt should see some healthy moisture; northern Queensland has been receiving beneficial weekly precipitation totals, while the southern regions have been dry, and decreased soil moisture is evident in satellite observations. However, we are looking for this pattern to improve over the coming weeks, and February totals look to be beneficial for the developing crop. For both the current and coming crop years, Australia/Thailand production will become increasingly important to the global balance sheet, as we are expecting Indian production to scale back. Given the current activity, the WTI range for fair value March09 sugar is bumped up slightly to the 12.45 to 13.05 cent range, and the view for May09 is now between 12.8 and 13.25 cents.

This entry was posted on Tuesday, January 27th, 2009 at 9:15 am and is filed under Agriculture, Global Commodities, Global Weather, Sugar, futures, weather. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.