Sugar prices facing a turning point at 21 cents
Published: 03/04/2010, 11:08:38 AM
Sugar's teetering rally could face its "Waterloo moment" if prices, which have already slumped by more than a quarter in the last month, slip a further 6%, according to Agrimoney.
Sucden Financial analyst Thomas Kujawa flagged a New York price of 21 cents a pound as key battleground for the bearish investors, who were encouraged on Wednesday by news of firm Brazilian and Indian production, and the bulls who pushed the market in February to its highest in 29 years.
Falling through this level, requiring a further decline of less than 1.5 cents, would open sugar prices to an "abyss", with a bottom at perhaps 13 cents a pound.
His analysis is based on scrutiny of chart patterns, which could form a so-called "head and shoulders" - seen as a selling signal - if prices fall below 21 cents a pound, a level which provided strong technical support for much of the last half of 2009.
"We have to be mindful that the support around 21 cents is likely to be the key going forward and will be the Waterloo moment should we test the bulls' and the bears' nerves," Mr Kujawa said.
However, he noted that a "state of emergency of relentless panic" in markets on Tuesday, when prices touched their lowest for nearly two months, might signal a fall in volatility.
"The old saying goes that it is panic that calls the tops and bottoms and then perhaps that might be it for the short-to-medium term," he said.