🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Our Secret Inflation Barometer Is Building a Breakout Base

Published 07/03/2024, 02:36 AM
XAG/USD
-
US500
-
DX
-
SI
-
CL
-
SB
-
CANE
-

Mother Nature can be cruel.

Sugar Futures Price Chart

On March 6, 2024, I wrote an article on sugar and inflation.

The biggest takeaway:

We will know about where inflation is headed by watching:

  1. Silver-and if it can begin to outperform gold-CHECK
  2. Oil, if spikes over $80 a barrel-CHECK
  3. Sugar, if even with increased production begins to move up back over 23 cents a pound-NOT YET
  4. The dollar fails 103 and selling pressure returns. Rumor has it through Russia that BRICS is working to create an independent payment system based on digital currencies and blockchain NO

Focusing on sugar

Recent weather conditions like the ones listed below are set to affect sugar prices.

  1. Below-normal rainfall in Brazil may cause dry weather that will reduce sugarcane yields and curb Brazil's sugar output.
  2. India's agricultural agency reported a fungus crop (red rot) was spreading through a key sugar-growing region.
  3. India’s below-normal monsoon rain may curb sugar output-current monsoon season down -11% from the long-term average.

Then add some concerning geopolitics:

  1. Protectionism is rising as countries look to protect their domestic markets.
  2. Developing nations, already grappling with food shortages and inflation, are particularly affected. Import-dependent countries, such as many in sub-Saharan Africa, remain vulnerable. For instance, Nigeria, which buys 98% of its raw sugar from other countries, faces challenges due to rising prices.
  3. Bolivia has been grappling with economic turmoil, which could, directly and indirectly, impact sugar prices-Bolivia’s economic woes may indirectly contribute to global sugar price fluctuations, especially if it disrupts trade or production.
  4. The same is true for Kenya, currently in turmoil.

CANE-Daily Chart

The futures chart shows clear support at the 50-DMA after it consolidated and formed a base above 20.00.

The next hurdle is 22.00.

The CANE chart also shows a decent bounce once the 50-DMA cleared and the price of 12.00 (risk point).

CANE is outperforming the benchmark for the first time in a while.

Real Motion shows us momentum inclining with the clearance of the Bollinger Band.

Resistance is higher at 13.30 or the 200-DMA.

While we keep hearing about disinflation, I keep seeing signs of nuanced inflation.

Whether sugar is our ultimate X factor or not, it is super reliable to watch because it checks all the boxes

  1. Weather
  2. Geopolitics
  3. Social unrest
  4. Supply chain and labor

ETF Summary

  • S&P 500 (SPY) 5400 support 5600 resistance
  • Russell 2000 (IWM) 197-202 tightest range to watch
  • Dow (DIA) 40k resistance
  • Nasdaq (QQQ) Sideways but still looking solid
  • Regional banks (KRE) Watching the range 45-50 CAREFULLY
  • Semiconductors (SMH) 260 pivotal support
  • Transportation (IYT) 67 hurdle to clear 64 support to hold
  • Biotechnology (IBB) 140 pivotal resistance
  • Retail (XRT) 200-week moving average support at 72.75. Needs to recapture 74.50
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) 76.50 key support

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.