ICE benchmark raw sugar futures are poised for a bullish ride, potentially propelling prices to 17 cents per lb after the market defied the day's weak trend on the commodity complex and surged above a downtrend line on Thursday, according to Reuters.
The most-active March contract on ICE Futures US vaulted more than 2% to a five-week high at 15.38 cents per lb, breaching the downward trendline from the Oct. 9 high around 15.10 cents.
"This is the first signal we've had in more than two months that there might actually be a bottom forming here," said Peter Ruud, technical analyst at Informa Global Markets in New York, referring to the 3-1/2-month low at 14.07 cents reached earlier this month.
This low level marks the head of an inverse head-and-shoulders formation, with the shoulders at the Dec. 17 low at 14.62 cents and Jan. 13 low at 14.67 cents, Ruud said.
"The next 24 hours will be critical," Ruud said. The market closed up 2.8% at 15.35 cents per lb on Thursday, confirming the shift above the inverse head-and-shoulders and the downward trendline. Follow-through buying, however, will be needed on Friday to send prices toward the next target at 16 cents and then 17 cents on pure momentum, Ruud said.
Turning away from the continuation spot chart and looking at the March contract, Thursday's session marked a potential breakout above a seven month downtrend, said Michael McDougall, senior director of the Brazil desk for Societe Generale in New York.
The market recently garnered spillover weakness from tumbling oil futures prices as they dropped to levels last seen in 2009, helping to take sugar futures to 14.07 cents a lb on Jan. 5. Cheap oil makes cane-based ethanol less competitive.
Reference: http://sugaronline.com/website_contents/view/1239010#sthash.ZZOzpPWu.dpuf