Short term
/
Buy
Trade view / 23 May 2017 at 12:54 GMT

Sugar looks set to fulfil its technical potential

Managing Partner / Spotlight Group
United Kingdom
Instrument: SBN7
Price target: 16.62
Market price: 16.38
Background

Sugar prices have risen indicating they may be able to overcome China's import tariff.  
As the top sugar buying country, China yesterday unveiled a significant increase in tariffs on sugar imports. Planned is an extra tariff of 45%, above the current 50%, on imports of sugar above the quota of 1.95m tonnes enforced by World Trade Organization rules. However, this did not prevent futures in the sweetener rising on international markets.

The 12-month chart shows New York futures have threatened to break their 50-day moving average for the first time in three months.
Sugar
 Source: www.investing.com, Spotlight Ideas 

Market expects renewed demand 

Sugar futures rose despite the announcement. The gains were partially attributed to the negative reaction of Chinese sugar futures to news of the levy. It has been introduced as part of a drive to boost the country's own sugar industry.

Zengzhou sugar futures for September dropped 0.5% to 6,688 Yuan a tonne; the decline was viewed as evidence that Chinese investors were disappointed that the levy was not higher. The proposed levels are still offering a chink of hope to exporters.

There is an idea that a clampdown Beijing ordered on the illegal imports of sugar will struggle meaning that source of demand will remain largely intact. China has made similar efforts in the past, but usually the effect only lasts for a week or two before things revert to normality.

Sugar 6-Year Chart:
Source: www.investing.com, Spotlight Ideas    

The technical measures through to one week all show strong buying to buying signals, however, I am aware that this is quite a speculative proposition and so I am taking a short-term approach to the trade.

Management and risk:

Parameters: Sugar US Cents/lb (SBN7) July 2017
Entry: Buy 16.38 12:41GMT
Targets: 16.47 ... 16.57 ... 16.62 ... 16.72
Stop: 16.10
Time horizon: Short-Term

— Edited by Clemens Bomsdorf

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
3y
Raneta Leonid Raneta Leonid
Stephen we have to short that Euro ;-)
3y
Stephen Pope Stephen Pope
Hi there Raneta,
It is a muddled technical outlook and can turn at any moment. I do not like the Euro as I think there is far too much complacency about the depth of the recovery.

Germany is mature, France will disappoint, Italy is highly problematic and the Greek issue is a perennial problem.

I am minded to sell with a an approach of taking short-term profits.

Steve
3y
Raneta Leonid Raneta Leonid
Tnx, I'm still shorting with a wider stop, didn't get stopped out yet, I'll stick with it, because I'm interpreting this move as corrective, so aiming to the south... will see.
3y
Ryan786 Ryan786
Is the buy still valid now? Trading at nearly 59 week low
3y
Stephen Pope Stephen Pope
No...I was stopped out and as I will be away from tomorrow for 11 days I am not looking to reactivate.

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