Sugar Sugar

[mickandpete]

Three weeks ago I was contacted by a former colleague and told to "Look at" Sugar
This is an attempt by me to rationalise some of the sites and info I have found
A concept that many of you may be unable to grasp is that we had sugar/sweet rationing in the UK which I am just able to remember.
Before I started this task I knew nothing about Sugar at all.
Sugar is grown in 2 forms Beet and Cane.


http://www.illovo.co.za/worldofsugar/internationalSugarStats.htm

This site gives the details in a nice simple form

http://www.trade2win.com/boards/showthread.php?t=12997&page=1&pp=10&highlight=Sugar

Searching this site Gene has provided a ong term chart of Brown sugar as traded on NYBOT now as Sugar 11

What the chart doesnt show is another huge spike in 1974 to about 60c/lb

Using a rough calc I see inflation adjusted prices as $7 and $4

The price then settles down and even falls to 6c/lb in later years.

It soon became apparent that Sugar is a Protected commodity and was affected by political factors more than economic ones.
The best example of this is Cuba where because of favourable terms trading with the old Soviet Union which were removed in the break up of the Union in the 1990s production/export has plummeted.
To find out why/how sugar shoud rise in price I looked at why its price has been so low since 1980
The obvious answer is Brazil who has become the worlds Sugar Super Power


http://www.sugaronline.com/iso/store/speeches/hannah6.pdf


http://www.sugaronline.com/iso/store/speeches/hannah4.pdf



These articles provides further details

The key to the low sugar price was Brazil


http://www.poly.asu.edu/msabr/research/workingpapers/msabr0207_brazilsugar.pdf

This is a very comprhensive article on Brazil

http://news.bbc.co.uk/1/hi/business/4581955.stm

This nice simple article sums up Ethanol and Brazil

So after years of having to dump sugar on the world market Brazil has now an alternative for its Sugar


http://www.bloomberg.com/apps/news?pid=10001099&sid=aFNCi152cO1U&refer=energy

http://www.busrep.co.za/index.php?fArticleId=3183894&fSectionId=615&fSetId=662..


and its affecting world sugar prices.It has been noted by senior brokers who traded through the 74 and 80 spikes that some similarities are evident now in regard to oil price rises/word tension


Having disregarded the EU beet crop as being too politically complex (subsidies/grants to previos colonies etc) this pops up


http://www.bloomberg.com/apps/news?pid=10000102&sid=auVLN0juHJcU&refer=uk


Not being an expert on sugar I can ony tell you that the many forecasts I have seen for the Suppy/Demand of sugar are at divergance but it looks as if there aint enough of it.

So what if the price rises

http://www.sugaralliance.org/desktopdefault.aspx?page_id=106&resource_id=730

We are talking here about the % of tradeable sugar 30% of world production (some estimates less)

Is the doubling/trebling of the price going to affect consumption.In the developed world as its such a tiny slice of a household budget probably not.Places like India ,I dont know.At what price would artifical sw3eeteners put the breaks on the price.Again I dont know.
What I do know is that MAJOR MAJOR changes are happening in the supply/demand structure of world sugar.So it would appear does BIG MONEY.

 

[fxmarkets]

The idea of ethanol based fuels looking ahead demand seems a plausible reason for people to get the horn with this at the mo... I mean even bush was getting all touchy feely and promoting new forms of sustainable energy for the planet ....

good heavens entire nations of farmers........ all these lovely crops and fresh air......... hmm theres a cycle of change kicking in here..... now who will want to bugger the idea completely?

nice post micknpete.

cheers Fx.

 

[mickandpete]

Thanks FX
This whole subject is very complex
I have tried to keep it as simple as I can.

 

[oatman]

.......and don't forget, sugar is a weed

 

[roryhdyer]

.......and don't forget, sugar is a weed

I went long sugar last week.

They need corn and sugar to make ethanol for fuel, that enough of a reason for a little punt. If oil prices rise brazil diverts more sugar for local use.

 

[bgold]

Bought Full (position) size Jul Sugar at 1780. Stop < 1730 Initial tgt > 2000
Also still open a trading position in London Sugar. Stop < 458

 

[minx]

Bought Full (position) size Jul Sugar at 1780. Stop < 1730 Initial tgt > 2000
Also still open a trading position in London Sugar. Stop < 458

Any thoughts on this pullback? Am still in but if it doesnt bounce from near these levels then I'll be baling. Am hoping the previous ceiling made over the last few weeks before the breakout will act as support and a base for the next move upwards.

 

[bgold]

Bought Full (position) size Jul Sugar at 1780. Stop < 1730 Initial tgt > 2000
Also still open a trading position in London Sugar. Stop < 458

That was a cold shower! :-(
Will have to analyse over weekend what exactly happened. Spend most of day staring at te metals ;-(

 

[timaru69]

I went short Sugar (NY)on the 5th based on a price pattern I like and confirmation from Vantagepoint. (I know this software gets a slating on this board but IMHO it can be a useful tool for confirmation of potential trades).

Have no idea where it could go but have moved stop to breakeven and may look to exit half position next week.

 

[real1]

Sugar Futures #11 (SB, NYBOT)

Sugar Futures #11 (SB, NYBOT)