Historically one of the most widely-traded commodities in the world, sugar accounts for around 2% of the global dry cargo market.[citation needed] International sugar prices show great volatility, ranging from around 3 to over 60 cents per pound in the past[update] 50 years. Of the world's 180-odd countries, around 100 produce sugar from beet or cane, a few more refine raw sugar to produce white sugar, and all countries consume sugar. Consumption of sugar ranges from around 3 kilograms per person per annum in Ethiopia to around 40 kg/person/yr in Belgium.[citation needed] Consumption per capita rises with income per capita until it reaches a plateau of around 35 kg per person per year in middle income countries.

World raw sugar price for the calendar years 1960 to 2006.Many countries subsidize sugar production heavily. The European Union, the United States, Japan and many developing countries subsidize domestic production and maintain high tariffs on imports. Sugar prices in these countries have often exceeded prices on the international market by up to three times; today, with world market sugar futures prices currently strong, such prices typically exceed world prices by two times.

Sugar consumption varies by country depending on the cultural traditions. But Brazil and has the highest per capita consumption and India -- the highest per-country consumption.

We at The Forum at SCCInvestments.com will show our techniques for analyzing natural gas futures and spot prices using various technical and fundamental analysis methods.  We encourage open discussion on this topic, including questions, comments and additional analysis from outside of our core group. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Last year I "attempted" to add sugar as one of the many issues in commodity space that I not only analyze, but also trade.  However, now almost 5 months later, I feel like this was more a project interrupted, not just on the trading side of the field but also in the analysis presented here on the board.




This was my look from August of last year.  Heavy sets of confluent price and time levels put a target on the upper $24-lower $25 price.  From this point I never returned, mostly due to the fact that other financial markets continued to drive higher.  It really didn't make sense that we would have a downturn in sugar due to demand or anything of that nature without a commensurate downturn in other markets.

That was a good thing...at least from a trading perspective.

The $25 area was money in terms of analysis, but that was where the buck stopped.  Sugar prices wound into a contracting triangle...which would have been death to just about any derivative purchases.

However, using the same technical analysis methods (and the same chart), I recently noticed that we just crossed over another confluence of price (and time) levels in the upper $28 range.


I've expanded the count a bit to include a now-visible 5-wave wave-c pattern that has moved up .  By the way, Wave C.3 is roughly 423.6% of Wave C.1 using internal projections and Wave C.5 is 50% of Wave C.1-3 internal from the end of Wave C.4.  That means it has all the makings of a 5-wave impulse (albeit as the final wave of a correction).

Sugar (continuous contract) hit a high of $28.90 on January 5, 2010...which comes to a confluence of time levels 150% of W.a taken from the end of Wave B and 188.6% of Wave A taken from the end of Wave A.

Note: 188.6% is the 88.6% level concatenated with 1.0. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

While the rest of the market seems to be marching to its own drummer, sugar has remained one of the instruments that more or less conforms to my technical machinations.


Back in January, as the market was topping out, sugar seemed to be topping too.  It was...with a few nuances.  And just as I started projecting downside targets, sugar was putting in a top (30.40 was the high on the continuous contract) that was just above my "sweet spot" at $28.90.  I don't cry too much over missing the highs by a few percentage points; it's just when either time or price continues opposite to my markings do I become irritable.

But there's nothing really irritable about the call on sugar...except maybe if you don't trade it direct.  I have yet to find anything that works with leverage other than sugar futures.  Imperial Sugar (IPSU) is the only real stock correlate with options, but it's not a great correlation at all.  There's an ETN, US Dow Jones UBS Sugar Subindex (SGG)...but it has no options whatsoever.  So unless you push enough weight to make a maximum of 20% worth your while, this one is blah.


As stated in Figure 1, Figure 2 confirms that our first downside target from January 17 numbers comes right into the range of Wave 4, which ended around $21.26.  We hit a low of $22.02 yesterday in Sugar #11...and I'd recommend anyone who's been on this ride to take a little off the table here.  For everyone else, it's a matter of patience; there's a great chance we get a retracement in the month of March that will let us continue lower.


This last chart just emphasizes the impulsive nature of the drive to a high of $30.40 in Sugar.  I have it contained within the bounds of a c-wave as part of a larger ABC correction. Whether this is correct or actually an impulse pattern at a larger level, we'll have to let the markets determine.  However, given the rather strict adherence to time ratios since August 2009, I have reason to believe that the correction is still in play.  Plus, with global economies still leary from the crisis of 2008, I can't say that global demand for sugar will drive prices higher in the immediate sense. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

So why is sugar the ONLY thing that seems to be feeling the pinch of the economy still?!?

Although unemployment is high in the United States, inflation seems high in China and debt high in Europe...equities seem to be chugging right along.  And yet, $30 in sugar seems only a memory at this point. We're $11 off the recent high...that's about 37% drop since peaking in February.  Almost vertical.


And this isn't a crying session or a soap box rant.  But it is a "come on, man" moment.  Either I'm completely missing the point with my fancy model of intermarket correlations (that aren't currently functional) or there's something else amiss in the markets.  The irony is that I've been wrong for what seems half a year in equities; and yet the call in sugar and a few other commodities have been spot on...using the same techniques and the same assumptions.

It's okay to be wrong...you just can't make a career of it in this business.  But needless to say, I still find it strange that the least accessible issues are behaving 'normally' while the common place issues are ignoring the very laws of nature at this point. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand