There continues to be more interest in World Sugar, as Monday’s trading is still holding on above the 15 cent mark for Jul09. Despite the lower close, bearish demand news and weaker technical indicators on Friday, Monday started off stronger. It appears that the short crop in India will force the world’s second largest sugarcane producer to increase imports further over most previous estimates, serving to take more Brazilian cane off of the physical market.

We hinted at this last week, and it looks like Brazilian producers will continue to remain in the driver’s seat as margins are strong with sugar these prices, and they can command a healthy premium for any excess capacity; strong performance in crude ($58 range) helps. In spite of the potentially widening deficit, we still feel that sugar remains overvalued in the low to mid 15 cent range, and advise scaling into decreasing long positions. The short term view places Jul09 around 15.25 cents, while we are looking for a pullback to the 14.6 – 14.9 range over the next few sessions.

This entry was posted on Tuesday, May 19th, 2009 at 10:23 am and is filed under Agriculture, Energy, Global Commodities, Global Weather, Sugar, futures. 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.