Raw sugar futures bounced back from Friday’s five-months, helped by cut to the net-long held by speculators.
Data from then US Commodity Futures Trading Commission, released after the markets closed on Friday, showed that managed money, proxy for speculators, cut its bullish position in raw sugar over the week to February 16.
This is the fourth week in a row that speculators have reeled in their net long position.
The move can be seen as supportive for prices, because a large speculator net-long leaves room for a sudden bout of profit taking to sink the market.
Bullish report
Nick Penney, of Sucden Financial, said the report was “bullish”.
But he warned that others might not take the data as supportive.
In fact he pointed out that the market has been declining since February 16, and “it is not inconceivable that the net position is now approaching flat or even slightly short overall”.
Even though net-longs have been scaled back, the move was driven by an increase to short bets, rather than a cut to long positions.
Mr Penney warned that the report could be “signalling that the speculative community may be trading more on macro issues, or at least no longer believe the bull story in sugar.
Brazilian production to rise
And there was extra bearish news from consultancy Datagro, which on Monday saw the sugar surplus, the extent to which supply outstrips demand, increasing in Brazil’s key centre-south cane growing region.
The exportable surplus for 2016-17 was seen at 23.98m tonnes, compared to 21.58m tonnes in the previous season.
The region should produce 33.8 million tonnes of sugar in 2015-17, Datagro said, up from the 31.18 million tonnes projected for the 2015/16 crop.
Still, with an oversold market, and a reduction in the speculator net long that has been hanging over the market, sugar prices rose.
The March raw sugar contract in New York, which is expiring this week, rose 0.6%, to 12.60 cents a pound, up from Friday’s five-month low.
And the May contract rose 0.6% to 12.75 cents a pound in morning deals.
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