wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(August 14, 1997) SUGAR: German statistician F.O. Licht called for a slight reduction in world sugar production, and a slight increase in consumption. However, this is relatively old news, and is not any surprise to the market. Most traders are focusing on weather in Thailand and India to give them a perspective on the direction of sugar prices, as El Nino may already be affecting world sugar crops. Australian sugar exports have fallen by about 10%, with concerns about Thailand's (down 14%) and the Cuban crop also being expressed. India is the world's largest producer and consumer of sugar. This year, their crop is about 30% smaller than last year. However, they have good stockpiles of sugar. Long-term traders should focus on this trade.
RECOMMENDATION–October sugar is developing a negative short-term aspect to the chart, so short-term traders might contemplate taking profits at current levels. The El Nino story has been wide circulated by this time, so a buildup of spec longs is distinctly possible. October has support near 1130, with further support seen near 1110 and in the 1090 and 1100 areas. There is still potential for selling to send the market a bit lower, possibly to the 1100-1120 area, but traders should buy October sugar on a test of the 1120-1130 area. If more conservative, hold out for about 1100-1110 or so. Use stops of 25 points or under 1090 or 1075. Objective is open. Option traders should begin to buy March 1200 calls in the event that El Nino creates a problem.
M. Steven Morgan
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Last updated on 08-15-97
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