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Commodity Special: Sweet Opportunity In Sugar
True or False -- Crude oil prices move in step with sugar prices.
Answer: That depends on whom you ask. According to the mainstream financial experts, the higher the cost of oil, the greater the demand for alternative fuels such as cane-based ethanol, so the answer is True with a capital T -- as the following news items affirm:
- “Soaring oil a blessing for sugar industry… The prices of the two commodities are highly synchronized. When oil climbs in price so does sugar as you realize there is a global shift towards cleaner fuels.” (March 6, 2008 AllAfrica.com)
- “Sugar appears poised to reap the records of high energy prices.” (July 9 Reuters)
- “Oil prices plunge, dragging most commodities lower. Sugar, used for food and fuel, has also seen a lot of liquidation, much of which was tied to the oil market.” (July 23 InsideFutures)
But -- according to historical data and actual fact-based reality, crude AND sugar prices are about as synchronized as a dolphin and a duck-billed platypus.
Case in point: From a fresh contract high on March 7, 2008, SUGAR prices turned down in a three-month long sell-off that slashed 40% off its value. All the while, Crude oil enjoyed an uninterrupted winning streak above the record setting height of $100-, $110-, $120-, and $130-per barrel.
Flash ahead to today: Sugar’s most recent descent to a six-week low got started on July 3, while crude oil’s free fall began on July 11.
(Sugar AND Oil: Crude Connection. Don’t get distracted by fundamentals. Stay ahead of the near-term trend changes in store for sugar via objective analysis and original price charts. The Wednesday July 23 Daily Futures Junctures has the sweet story in full.)
Like I said on these pages before, the only thing that is consistent about fundamental analysis of the world’s leading financial markets is its inconsistency.
As for objective, original, and disciplined insight into where SUGAR prices could be in the days ahead, the July 23 Daily Futures Junctures has exactly that. In the July 23 DFJ, Elliott Wave International’s senior commodity analyst Jeffrey Kennedy identifies one of the most important wave patterns of all within Sugar’s price chart: the Contracting Triangle.
As for a brief definition of the triangle, Jeffrey’s Traders Classroom Collection Volume 2 has this to say: “Triangles are probably the easiest wave pattern to identify because prices simply trade sideways during these periods. They offer an important piece of forecasting information – they only occur just prior to the final wave of a sequence. This is why they are strictly limited to the wave 4, B, or X positions. IN other words, if you run into a triangle, you know the train is coming into the station.”
And, in the July 23 Daily Futures Junctures, Jeffrey reveals whether the next destination for the Sugar train is going North or South – regardless of where Crude oil prices are headed in the meantime. Get on board before the sweet opportunity is gone via a risk-free subscription today.