Day Trading & Forex Forum

DaveT

SUGAR gets very little coverage here - so i'll kick off with my analysis of WHITE SUGAR (LIFFE).

Fundamentals - (RAW)
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World raw sugar production DOWN
- 03/04 est 146.8 (vs 149.9)

Global consumption UP
- 03/04 est. 143.2 (vs. 139.4)

Supplies hit by expected drop in output in India, Russia, EU, Thailand., due to unfavourable weather.

Lowest Stocks-to-use ratio in 6 years. Small global deficit (270,000 MT) forecast. Chinese demand to follow?

Fundamentals (WHITE)
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Tightening deliverable supply scenario.
Expected demand increase.


TECHNICALS - I'll post 3 charts.
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DAILY CHART -

(MAY04) has shown a steep rise since the new year.
A nice saucer/rounding bottom has formed.
The London market is showing greater strength than CSC (NY).
RSI wedge breakout is at overbought, so could fail - correction due?

Attached Thumbnails

 

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David.

DaveT

WEEKLY CHARTS
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Moving averages crossed and pointing up.

Momentum studies signal new uptrend - I've used SLOW STOCHASTIC (4,26,52) - note crossing.

Commodity Channel Index is firmly above 100 - V. Bullish - similar to early 2000 rally ? (see highlighted areas)

A broadening channel has formed - A break of this would signal higher levels.

Attached Thumbnails

 

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David.

DaveT

MONTHLY CHART
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For the monthly , I've compared LIFFE SUGAR to HG COPPER.

Just to highlight the APPARENT broad correlation.

It really shows how the commodities often follow eath other in MACRO-ECONOMIC TERMS.

Will SUGAR experience a strong bull market within 1-2 years, following COPPER as in the historical past?

Attached Thumbnails

 

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David.

TWI

Dave T - Fascinating correlation, I never noticed that before . Would be a great spread by the look of it. I wonder what the relative contract ratio is.

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"I refuse to tiptoe quietly through life
only to arrive safely at death"

oatman

Hang about.....we'll be on the Coffee/Cocoa spread soon

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Every market has a bottom, every bottom has a hole in it.

scpope

DaveT,

slightly off topic, but how did you discover the apparent correlation between copper and sugar? was it just lots of research/trial & error?
Do you know the differance between sugar #5 and #11. These are both quoted on Finspreads for us sb'ers.

Thanks Stephen

DaveT

scpope -

Sugar #5 is WHITE SUGAR (refined) - traded on LIFFE, in London.

Sugar #11 is RAW SUGAR (unrefined) , traded on CSCE, New York.

Both types are produced from CANE or BEET.

Sugar CANE represents 60-70% of total production.
Sugar BEET represents about 30-40% of production.

Largest Producers (of Cane & Beet) :

1) Brazil
2) India
3) EU, China, US , Thailand, Austrailia

Largest Consumers :

1) India
2) EU
3) China
4) Brazil, USA, Russia, Mexico, Indonesia.

Regarding the SUGAR/COPPER correlation: I am always comparing & contrasting different commodities/securities/markets,etc.

If you look at enough charts you will begin to intuitively see the relationships; positive, negative, or neutral.

I

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David.

scpope

David,

Thanks for the reply. I am probably guilty of not looking at charts over a long enough time frame. Frequently I find that good looking trades from daily charts look less appealing on weekly charts. Must learn to also look at monthly.

Last July I went for a job interview assessment day. On the same day their was an engineer who had just been made redundant from a sugar processing mill in London. He was explaining that this was due to the imminent deregulation of the European sugar market. ie. the removal of subsidies or trade barriers or similiar (details foggy due to time not age!) making imports cheaper and hence processing being reduced inside EU. Do you know if this has happened yet. I imagine it would have a positive effect on futures price, if it lead to international prices rising.

Stephen