Sugar Futures Poised to Climb – Weekly Commodities Report

Sugar Futures Poised to Climb – Weekly Commodities Report

Sugar is quietly staging an impressive rally off its October lows, when it briefly dipped below the 11-cent mark.  Since then, we can see that sugar prices are clearly moving from the “lower left to the upper right,” recently hitting a 5-month high.
Is it time to buy sugar?  I think so.  Fundamentally, there are a number of bullish factors lining up:
What could dampen demand for sugar?  Low crude oil prices could reduce the demand for sugar to be converted into ethanol.  Sugar into ethanol is profitable at about $50 oil.  So while a rally in oil could send sugar prices higher, continued low oil prices may weigh on sugar.
Also important to note that President Obama does not appear to be in favor of sugar based ethanol for our energy needs.  Obama did very well in the Midwest, including his win in Iowa in the primaries, and appears to be set on finding energy solutions that can be harnessed right here in the USA, such as ethanol from switchgrass.
Other potential trades to watch:
  • Short the Japanese Yen – looks like the Carry Trade has officially unwound
  • Long the Australian Dollar – Aussie and Canadian dollar could rally if commodity prices start ticking up
  • Short long dated US Treasury Bonds – sound like a broken record here, but it appears a downtrend may have (finally) started
  • Short the Euro – as disastrous as the US dollar is, the Euro appears to be circing the bowl at a faster rate
  • Buy and hold gold stocks 

Open positions

Date Position Qty Month/Yr Contract Entry Price Last Price Profit/Loss
 02/26/09   Long   1   MAY 09   Corn         373 1/2   360   ($675.00)     

 02/27/09   Long   1   MAY 09   Sugar #11         13.79   13.73   ($67.20)     
Net Profit/Loss On Open Positions ($742.20)  

Account Balances

Current Cash Balance $30,648.02
Open Trade Equity ($742.20)
Total Equity $29,905.82
Long Option Value $0.00
Short Option Value $0.00
Net Liquidating Value $29,905.82

Cashed out: $20,000.00
Total value: $49,905.82
Weekly return: 0.4%
2009 YTD return: -41.3% 🙁

Prior year’s results:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial stake: $2,000.00