May09 sugar futures are appropriately priced, and short term movements will likely be linked to directional moves in crude. Most of the recent crop news from India and Brazil are priced into May and July, and technical signals are slightly bearish. Lower crude prices, currently down approximately 4.5%, will support short term negative moves in sugar. Those following raw sugar should start to focus more on Jul/Oct as the weather pattern in India can lead to some more surprises in the coming months. We do anticipate a better start to the Monsoon season this year, but the significant lack of soil moisture will continue to be a problem for the new crop, possibly leading to some early development issues (particularly in southern growing regions). In addition, the short term outlook is even moisture deficient in the northern belt, and the already poor crop expectations still has the potential to get worse. Additional plantings will help, but not as much as many suspect if our long range forecast does verify. Despite the recent activity in sugar futures, the WTI short term view for the May09 contract has not changed from last week; the expectations for fair value are still in the 12.75 to 13.1 cent range for May09, and Jul09 is slightly higher at 13.0 and 13.35 cents. We do, however, see additional upside potential for both May and July, and possibly October.

Please contact Michael Ferrari (mferrari at wxtrends dot com) if have any questions or would like to discuss further.

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This entry was posted on Monday, March 16th, 2009 at 3:53 pm and is filed under Agriculture, Biofuels, Global Weather, Softs, 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.