E Are Sugar Prices Bottoming?

Sugar Futures

Sugar futures in the May contract are currently trading higher by 13 points at 13.40 a pound bouncing off major support at the 13.20 level which is right at the contract low as sugar prices have been trading between 13/14 over the last 5 weeks as I think this commodity is forming a bottoming pattern. Large worldwide supplies continue to keep a lid on prices as soft commodity markets except for cocoa remains weak as orange juice and coffee are right near recent lows.

Sugar prices are still trading below its 20 and 100 day moving average as the trend is lower, however I will not take a short position as I think the downside is limited as I will be looking at a bullish position in the weeks ahead as the chart structure is outstanding due to the fact that we have consolidated over the last month.

If the contract low of 13.17 which was hit on January 19th is broken prices possibly could head down to the 12.50 level as sugar prices are historically cheap especially with a weakening U.S dollar and improving economies throughout the world as I think demand will start to come back into sugar down the road, but at the current time look at other markets that are beginning to trend, but keep a close eye on this market.

Volatility in sugar at the present time is relatively low as I expect that to increase in the months ahead as strong demand for ethanol continues to support prices from dropping much further in my opinion.

TREND: –LOWER

CHART STRUCTURE:

EXCELLENT VOLATILITY—LOW