fb#C-SUGAR Price Forecast | Expected rise in Brazil exports bearish for sugar price | IFCM

Technical Analysis #C-SUGAR : 2020-04-02

Recommendation for Sugar :

Sell
Strong SellSellNeutralBuyStrong Buy

Below 10.02

Sell Stop

Above 11.55

Stop Loss

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Senior Analytical Expert
Articles 1559
IndicatorValueSignal
RSI Neutral
MACD Sell
Donchian Channel Sell
MA(200) Sell
Fractals Sell
Parabolic SAR Sell

Chart Analysis

IFC Markets Tech Analysis

On the daily timeframe #C-SUGAR: D1 is falling under 200-day moving average MA(200) following a retracement higher two weeks ago. We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 10.02. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the last fractal high at 11.55. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (11.55) without reaching the order (10.02), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Fundamental Analysis

Sugar price is falling with Brazil expected to increase its export of sugar. Will the sugar price continue falling?

Mills in Brazil are capable of switching cane toward sugar or ethanol production, depending on market prices. Low crude oil prices make production of bioethanol from sugar cane a less attractive alternative for sugar mills compared to production of sugar. And weaker currency of Brazil – real, makes switching from bioethanol to sugar production more profitable for Brazil’s mills as ethanol is mostly sold domestically while sugar is being exported, earning appreciating dollars for exporters. Brazil's mills allocated an all-time low amount of cane for sugar last two years - around 34%, as ethanol gave them higher returns. Copersucar, the world’s largest sugar co-op, estimates mills will allocate 46% cane for sugar in the new season. This will increase Brazil’s sugar export by around 10 million tons. Brazil is the top global sugar producer. A rise in sugar supply is bearish for sugar prices.

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