Sugar 11

Discussion in 'Ag Futures' started by GlobalFinancier, Apr 1, 2006.

  1. Double bottom, probable continuation of uptrend.
     
  2. Bump, though down 5% from my initial post price, it appears there is strong support near 16. With the rally of the commodities, I believe we should see a move to the upside soon.
     
  3. I believe that Sugar will put in an intermediate term bottom next week or so.
    I will probably enter Sugar futures with real money, I'll let you know when...
     
  4. Seems ready to blow to me. Double bottom? Not so sure, but definitely a bullish triangle that's closing soon.

    notes for sugar 11 (sb):

    Moves in symapthy with crude, gasoline, and ethanol futures (symbol: ax on cbot).

    A simple continuation of last year's upward trendline would have us launching off soon, at about a 45 degree angle on the charts, so RSI etc is fine.

    Earlier this month, when I bought in at 16.75 or so (sbv6 -- oct sugar), I thought we were going to see a cup and handle formation. Now looks more like a bullish triangle. Both are similar.

    Historically, sugar's risen with gold and crude. 40 cents/pound (yes, that's right, were past highs, and not unthinkable now.)

    Some fundamentals:

    3 years running now, world consumption greater than production.

    India uses 55% of domestically produced sugar to make ethanol.
    Brazilian ethanol a much-heralded success, being exported, with demand to rise. ***Anyone have good stats on this?***

    Sugar-based ethanol produced in Brazil for $25-$35 a barrel. Yes, that's right. Remember, 1 barrel = 42 gallons.

    Japanese to import Brazilian ethanol.

    Sugar may become the world's crop of choice for ethanol.

    Other tidbits:

    Awesome fills on NYBOT sugar futures options. So much better than futures options on crude, unleaded, and amazingly better than metals.

    Surge in volatility very possible if resistance (somewhere around 18 cents on the near-month) is breached.

    Options strategies might include:
    Straight calls (my personal fav here).
    Long backspreads for protection.
    Long strangles and straddles (for the faint of heart).
    Bull call spreads (possibly very attractive on tha March 07 contract.)

    In my opinion US's 59 cent tariff on imported ethanol very unlikely to be lifted any time soon, my one real bearish note.

    Anyone else interested in this market?
     
  5. pskarp

    pskarp

    Day4night

    "Bull call spreads (possibly very attractive on tha March 07 contract.)"

    It's interesting you should mention that. I blogged about Sugar on March 26 and 27 (2 seperate posts) and I had mentioned about the March 07.

    The only difference is I structured is as a calendar spread.
    The amazing this was/is you could buy a 6 or 7 cent wide bull call spread (20 strike/ 27 strike) for about a 1G and sell a 15-16 ish put, about 30 days till expiration for about 400- 500.

    There is plenty of long-term support at the 15 area. Even if I'm wrong the market should't take that area right out without bounding of the Fibonacci levels. The first round of options expired worthless. After selling another put abut 30 days out, as long as these expire worthless, the bull call spread will be paid for in full.

    But the great thing is these babys have about 1 year left till expiration! I love this trade.
     
  6. Sugar will eventually be higher than the all time high of 66 cents.
     
  7. I agree.
    However, my local market is still closed so I haven't been able to get my goddamn 10 tons, or 20 after a breakout and more later on.
     
  8. I mentioned a bull call spread on the MArch 07 contract looks good, but then thought, why hold on to a bull spread so long? Maybe a bull spread is better for the Oct contract. So how to mitigate time decay for the Mar 07 (sbh7) options?
     
  9. Edward your point about market timing is understood but you're wrong about comparing stock indices with commodity prices; the two are very different.

    Long term charts of commodities tend to show stagnant prices especially when adjusted for inflation/monetary expansion. Grains, for example, have been coming DOWN in price for the last hundred years... otherwise we'd probably have more farmers. Sugar prices have not risen over time, the way stock indices have.
    It's said that an ounce of gold can usually buy a decently tailored suit -- at least they said that in the 19th century. True today at $660/oz?

    Now we're in a period when commodities provide better returns than stocks in general (excepting grains...). The last two periods like this have lasted 14 years, that is, when the gold outperformed the Dow as an asset.

    This time around some reasons are:

    1) Extreme global growth esp. in Asia, Eastern Europe, etc.

    2) Previous underinvestment in commodity production, and a lag therefore.

    3) Supply problems and refining problems with oil and to a lesser degree nat gas, adding to the demand side troubles.

    4) In the case of sugar, new competition for use: is it food for us or for our cars?

    5) Falling dollar? Falling paper currencies in general? Watch money supply! M3 expanding at 7% a year!

    6) Fear of geopolitical catastrophe, feeding into bth oil and gold prices.

    7) Bleed-thru inflation curtailed by extreme amounts of new cheap labor coming on board in the world.

    Maybe you already know this.

    Anyway, the meaning is that to say that sugar will reach new all-time highs even in the next 5 years is already a bold statement.
     
  10. "choose a window of time when your prediction will happen - THAT is REALLY difficult to do."

    As Richard Russell would say "...don't tell me WHAT to invest in, tell me WHEN..."

    gold and silver is my bag really and I reckon specialising is important, but I recently got into #11, having watched it for a while now, by way of some diversification.

    Getting in, staying in and holding on has served me well in the PMs so far and I'm hoping a similar strategy will serve in #11, it does seem to track wti, ethanol etc.

    That said it appears to be having difficulty making it's mind up here. fwiw if anything it seems to be creating a rising wedge ... which ain't bullish. This brings me onto my other point: StockCharts doesn't do #11 and the only public domain chart I can find is at FutureSource. Any ieas or pointers where one can get such info?

    TIA
     
    #10     May 5, 2006