I have realised I didn’t post about my sugar trade on Friday — because I was going on holiday. Sugar had broken below the key support level at 21. Fundamentally, the sugar market is predicted to be tight this year but that story seems to have got ahead of itself and pushed the market up to unsustainable levels. Last week it was reported that Indian production could be better than expected (together with the kind of arguments made by people who have not changed their minds when the facts have changed, like “if there was a bad monsoon it would leave the price vulnerable to upside risks”). That report came after key purchasing countries had declined to buy at the prices on offer in the market, and exacerbated a fall from speculative highs. A Bloomberg report that a good majority of brokers expected the sugar price to rise this week added to my conviction for a short position.

I waited for an entry, despite watching the break through 21 — I thought that was a key level and in a commodity market it would have been a good idea to get in quickly, rather than wait for a strong breakout. As it was, the breakout lasted two days. I bought the pullback.

Charts from IG Index (showing approx. entry and stop levels) and TimingCharts.com.

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