Upside potential for May/Jul sugar futures
Following some strong performance at the end of Feb when the contract was approaching 14 cents, May sugar futures have come back down to the mid 12 cent range; specs are focusing on anticipated demand erosion that accompanies a stronger $USD. But as we are seeing continued advances in oil (up again this morning), there will be additional support for sugar, and again we view the 12.5 cent range as an attractive entry for May. March is an important month for rainfall in many cane origins. The current pattern has been beneficial for Australia (in mid crop) and AsiaPac regions, however the cane regions in both China and India could use additional moisture; the pattern for the next 7 days should help newly planted cane in China. As mentioned last week, the current rainfall pattern in C-S Brazil is helpful for adding to pre-harvest yield potential, but that pattern is likely to change in the coming weeks. Uncertainty in global stocks will start to filter into the market in the months ahead, and it appears that there is more upside potential for May/Jul futures. The WTI short term view for the May09 contract, is for fair value to fall in the 12.75 to 13.1 cent range, and Jul09 between 12.9 and 13.25 cents.
