CANE
SUGARUSD Confirmed the Bullish BAMM Trigger Line as SupportThis has been a Years Long trade and Sugar is nearly there at the 88.6% target, but I do think since we spent some time testing the B point as support that it has potential for pushing all the way to the 1.13 Extension to complete a Full ABCD, so I will be opening up another bullish position on the CANE ETF from here and targeting higher levels.
Wheat deal in the Black Sea- Strike Causes Price Rise LONGWEAT is a popular ETF tracking wheat as a commodity. Because of geopolitical issues
the rising price is an escalator for basic food prices from Africa to USA and globally.
Sugar is a commodity that always seems to rise. Here on this daily chart, I have plotted
the ratio of wheat to sugar spot prices which typically is a falling ratio. However, the
downtrend pivoted to coincide with the wheat deal for Ukraine falling apart and pressuring
commodity prices. On the RSI indicator both low TF and highTF are rising and are not
overall to strong. I can easily conclude that wheat is a safe long bet a slow mover that
might be low risk in what right now is a chaotic and volatile market that could be topping out.
There is no expected flip of the wheat price trend until the geopolitical winds change
direction. I will open a long position in WEAT and check CORN for a similar analysis.
CANE - Fertilizer Shortage TradeIt's a Brave New World. Fertilizer was facing a shortage going into 2022 (like most commodities, it has had a undersized amount of investment, with tech seeing most of the in flows) but after the Putin YOLO (that's my ELI5), potash is now in shortage. Using that fact as a basis for expanding my commodity thesis to include more food commodities.
I picked CANE because of the chart. Sugar has not caught bids like soy and corn and it's chart is a screaming buy. Before smashing the market buy button like an ape, watch the long standing resistance level we are at right now. This resistance has held since 2017 so this is a critical level. I am expecting a retest at the 9.75 level where I will be looking at the volume response. I'm so itchy to buy that I might buy regardless of response, the tailwinds are simply too strong to ignore. It is taking a great deal of restraint to wait for a response but since it is such a vital level and I want the best entry possible, patience and watching volume response is the name of the game.
I will update with entry price. Happy hunting, Good luck, and God speed.
Long $SGG Sugar ETF at 33.50 or 10.30 #Sugar Futures Spot PriceSugar and Brazil Relationship:
Since Brazil has been the leading producer of sugarcane in the world, the value of the Brazilian Real plays a significant role in the price of sugar futures. Weakness in the Brazilian Real against the US Dollar encourages Brazil's sugar producers to boost exports. The logic is that a lower Brazilian Real incentivizes Brazilian farmers to produce more sugar to export sell for US Dollars. However, it's likely that the Brazil Real will appreciate against U.S Dollar over the next couple months based on technical analysis and possible economic intervention from the Brazilian Government.
- U.S. Dollar/Brazil Real pairing or BRB index showing many downside trend change signals here such as bearish RSI divergence since early March on Daily chart. Weekly chart showing RSI and MACD curling down from record highs with Momentum also curling down but after a double test of highs
Growing Ethanol Demand:
In July 2019, India announced they will work with Brazil on ethanol production. Using more cane in India to produce ethanol, instead of sugar, could reduce the global supply of the sweetener. 32M sugarcane could be used to produce ethanol and electricity instead of sugar in the next year. The joint venture, named BP Bunge Bioenergia, will manage 11 cane processing plants in Brazil with capacity to crush 32 million tonnes of cane per year
- Higher crude oil/gasoline prices benefit ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production.
- India and many other countries are boosting ethanol output for sanitisers on coronavirus pandemic
Supply Curbs:
In July 2019, India, the second largest producer of sugarcane, announced they will create a buffer stock of 4 million MT of sugar for 1-year starting Aug 1 in an attempt to limit supply and support domestic sugar prices. Also, further supply disruptions are expected in India due to Coronavirus Lockdown.
- The Indian Sugar Mills Association (ISMA) reported Wednesday that sugar production in India dropped sharply by -22% y/y to 23.27 MMT during Oct-Mar
- Sugar production in Thailand, the third largest producer of sugarcane, is expected to fall 28% to a nine-year low of 10.5 million tonnes in the current crop season as drought curtails cane supplies
India Sugar Subsidies:
In August 2019, Brazil, Australia and Guatemala have complained again to the WTO to set up dispute panels to rule on India’s sugar subsidies.
- A change in WTO trade dispute status to Panel Composed on October 28th supports the global price of sugar. This news catalyst increases the possibility of removal of India sugar subsidies. If removed, India sugar stockpiles could fall thus decreasing global supply. Now in April 2020, we can assume the dispute must be in the further into review process
Real-Time CashFlo Twitter Post:
twitter.com
SUGARUSD LongSugar has just broken out of a falling wedge pattern which could also be bullish flag. Nothing too complex, but I marked out where any divergences have played out coupled with the RSI > 65 signalling intermediate tops. I think sugar has anywhere from 5 to 10 percent to go up before marking another intermediate top.
For this trade, use the CANE ETF. I would suggest a stop below today's open and to just let this trade run.
LONG SUGAR @ 10.48Technical Analysis:
- Double Bottom at 10.45 from August 2015
- Oversold on daily/weekly timeframes
- Retest of 5monthSMA likely @ 11.50
Fundamental Analysis:
- Look for Brazil Real bounce against USD - this will lead to less selling for $ and more domestic demand in Brazil
- Higher lows since 1985 reflecting growing demand
- Higher energy means more domestic demand in Brazil
- El Nino Weather Pattern could damper production in Brazil and India
