Sugar futures in the May contract finished slightly higher this Friday afternoon in New York, up 12 points at 15.30 a pound as prices are hovering right near a 2 week high. I'm keeping a very close eye on this market as I'm looking at a bullish position on any type of weakness as I believe the risk/reward is in your favor, especially longer-term.
Fundamentally speaking, prices continue to be undercut by the raging pandemic in Brazil, which may prompt the government to extend lockdowns that crimp fuel demand and encourage Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies. Brazil reported a record of 4,195 Covid deaths on Tuesday.
I believe the Coronavirus will be reduced significantly in Europe. Therefore demand will come back to these commodities eventually. It is just a matter of when the United States is performing excellent at the current time. Sugar is still trading right at its 100-day moving average but slightly below its 20-day as the trend is mixed to lower, so look to be a buyer on any price weakness. I do not believe the 17.50 level will be the high in this commodity come 2021.
I also have bullish recommendations in coffee, orange juice, and cotton as I think the whole sector remains cheap. The chart structure at the current time is starting to improve daily as we are trading at major support on the monthly chart as I see no reason to be short.
TREND: MIXED - LOWER
CHART STRUCTURE: IMPROVING
Cotton futures in the May contract is higher this Friday afternoon in New York, up another 60 points at 82.16 as prices are right near a 2 week high. The volatility in cotton certainly has increased substantially over the last several weeks.
I have been recommending a bullish from the 79.00 level and if you took that trade, continue to place the stop loss at 66.00 as an exit strategy as I think there is a high probability that a bottom has taken place. Continue reading "Futures Performance Looks To Be Mixed"