The price of sugar is exposed to many global and national influences. These include government tariffs, production costs, climate change and geopolitical instability. These demand and supply factors all affect movement within the market.
Most of the sugar production takes place in a few countries around the world. The top producing countries include Brazil, India and Thailand. A report published in 2018 demonstrates the positive interaction between crude oil and the world food price index, which includes the subcategories of dairy, grain, vegetable oil and sugar. Sugar is considered a strategic raw material in various countries. In Russia, for example, the government strongly supports the growth of the sugar industry,
Because sugar is viewed as a luxury rather than a necessity, wealthier economies generally have higher consumption than poorer economies. However, when times are tough in poorer countries, food hoarding can make sugar a coveted luxury item. Emerging markets in Asia and South America are the fastest growing sugar consumers, so the continued strength of these economies is helping prices. Why do we follow the price of sugar so closely?
Over the weekend we covered the importance of the 6 month calendar range in January. That will speak PPI and Fed this week, promising after many gains. And each instrument will create a row.
Including sugar.
Technology
Sugar futures have been trading between 17.5 cents and 21 cents for months. While many instruments traded to new multi-year lows in 2022, sugar has held firm.
On the weekly chart, sugar futures are in an upward phase. On our triple play leadership indicator, Zucker has outperformed the benchmark since fall 2022. And while the lead has declined and is now performing on par with the benchmark, we still expect Zucker to remain an outperformer in 2023.
The Real Motion Indicator is showing momentum slightly below price as momentum is slightly below the 50-DMA while price is above it. However, given Tuesday’s price action and the close above 20 cents (chart not updated at the time of writing), we expect momentum to pick up should those levels hold. Notably, the US dollar has risen and sugar has acted independently, also gaining. With the 6 month calendar range resetting this week, remember that sugar also has a range to watch.
Whether it’s the weather, oil demand (ethanol) versus supply, social unrest (food hoarding) and/or government subsidies, Sugar Clear should be bullish and inflationary on 20.19 (Tuesday’s high). If this week starts as a one day miracle and the price falls below 18.92 cents then we expect to see another trip to around 17.50 with inflation being less of a concern.
We rely on the former.
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In Stock Charts TV Charting Forward 2023Mish sits down with a panel of experts to have an open discussion about what they see and hear about in the markets.
Mish presents her outlook for 2023 and gives you 6 trading ideas from macro to micro in Thursday 12th January Stock Charts TV Your Daily Five.
Mish and John discuss how stocks and commodities can come together to a point this appearance on Bloomberg BNN.
Mish and the team discuss their prospects and why inflation will persist, with a focus on gold this appearance on Benzinga.
As the weekly charts continue to speak of a bear market rally, Mish and presenter Dave Keller discuss the promise of the daily charts the Tuesday, January 10 issue of The last bar (full video here).
In this appearance on Business First AM, Misch discusses global inflation concerns.
- S&P 500 (SPY): Closed above the 200-DMA, must now stay above 400 and clear.
- Russell 2000 (IWM): Does that come through 190? A game changer when it does that.
- Dow (DIA): December high of 348.22 is now on the horizon.
- Nasdaq (QQQ): Right at the 200 WMA resistance of 281.
- Regional Banks (KRE): Still the sector of greatest concern, with 60 crucial and less than 57 lights out. Must clear 65 to stay in game.
- Semiconductor (SMH): Cleared the 50-WMA or 226 and now if it’s good needs to stay up.
- Transport (IYT): Stopped at 50-WMA or 231.50.
- Biotechnology (IBB): 138.74 December high, place to clear with 130 key support.
- Retail (XRT): Amazing how the January 6-month range and these 50 WMAs line up in the Economic Modern Family. 66.70 to see the number.
Misch Schneider
MarketGauge.com
Director of Trade Research and Education
Misch Schneider serves as director of trading education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and training to thousands of individuals, major financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial professionals to follow on Twitter. In 2018, Mish was the winner of Top Stock Pick of the year for RealVision.
