Tags: sugar | price | bottom | investors

Is Sugar Bottoming Again?

Is Sugar Bottoming Again?
(Otherlet/Dreamstime)

By Wednesday, 29 April 2020 08:00 AM Current | Bio | Archive

Sugar futures or the sugar continuous contract (can also check out the July contract SBN20) rallied 4.5%, leaving a potential bottoming pattern. Again.

This is important for two reasons.

First, sugar is tied to ethanol, so that could signal that the worst of the oil debacle is over.

Secondly, sugar is a secret inflationary indicator that could be telling us that deflation expectations have bottomed.

Let us look at both.

As the pandemic rolls on, gasoline consumption (in red) has expanded.

The dark blue line shows inplied ethanol demand, which is also rising.

Note that the lighter blue line is actual ethanol demand, rising at the fastest rate.

As ethanol fermentation uses sugar, that helps explain why sugar might have bottomed.

Sugar as a secret inflationary indicator is a topic I have written and spoken about in the past.

What we could look at right now, is not so much the inflation aspect, rather, the potential bottom of the deflationary metrics.

The Fed has clearly stated that they want to see a rise in inflation. Furthermore, with GDP declining by 4.8% and consumer spending declining buy 7.6%, perhaps that too, is the worst of it and like gasoline demand, it’s only up from here.

Regardless, looking at the chart, sugar made a new multiyear low and closed above the highs of the last 2 days. The volume was good.

Now, a move and close over 10.00 (or the 10 day moving average) could offer a low risk buy, especially if like the overall market, hope is truly returning to consumers.

Michele ‘Mish’ Schneider serves as Director of Trading Education at MarketGauge.com. For 20 years, MarketGauge.com has provided financial information and education to thousands. MarketWatch named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish won the Top Stock Pick of the year for RealVision. Follow her on Twitter at Michele Schneider @marketminute.

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Sugar futures or the sugar continuous contract (can also check out the July contract SBN20) rallied 4.5% today, leaving a potential bottoming pattern. Again.
sugar, price, bottom, investors
318
2020-00-29
Wednesday, 29 April 2020 08:00 AM
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