The most significant mover in the commodities market over the past month has been Sugar, experiencing an increase of over 16%.
As I am a big follower of weather patterns and have predicted weather could be a huge factor on several crops this year, one major concern for sugar is that the current El Nino weather pattern will curtail global sugar output.
Furthermore, India's ban on sugar exports will continue to keep global supplies tight.
This comes after India announced a 50% export tax on molasses from sugar refining.
Monsoons in India (Jun-Sep) fell 6% below average, the poorest monsoon rainfall in 5 years.
Additionally, the Thai Sugar Millers Corp on Nov 1 projected that Thailand's 2023/24 sugar production would fall by -36% y/y to a 17-year low due to a severe drought.
I love to watch sugar as a barometer for food prices (it’s in practically every processed food product) and as a bellwether for social unrest and inflation.
Folks will fight over sugar when there are shortages, and it is not even Valentine’s Day yet.
As more and more reports claim inflation is over, the sweet white stuff is worth watching.
CANE, the ETF for sugar has rallied into some resistance at the 200-day moving average.
However, it has handily cleared the January 6-month calendar range high making the trend higher for longer seem obvious.
CANE outperforms SPY and while momentum has been just ok, with further price rises, we could see momentum kick in.
On the March 2024 futures chart, 23.00 is support while 24.00 is resistance.
Most noteworthy is the notion of supercycles.
Sugar is a great example of a 400% move higher since 2020, followed by a nearly 40% move lower. Currently, a 20% move up since it reached the nadir of 20.00.
Volatility-yes-the inherent nature of a super cycle.
Has the next wave begun?
ETF Summary
- S&P 500 (SPY) 480 now the pivotal zone
- Russell 2000 (IWM) 195 pivotal, 190 support to hold
- Dow (DIA) 375 support
- Nasdaq (QQQ) 408-409 support
- Regional banks (KRE) Back over 50 which needs to hold
- Semiconductors (SMH) 184 support
- Transportation (IYT) 262 now pivotal
- Biotechnology (IBB) 135 pivotal
- Retail (XRT) Held support at 65 but still needs to get back over 70.00