Sugar Prices Hit 28-Year High - Jim Rogers Sees a Wonderful Future

The severe supply/demand imbalance in sugar fundamentals has propelled sugar prices to a 28-year high. The big driver of the rally has been India - which, as we reported earlier this year, has turned into a net importer of sugar.

As you can see below, sugar prices are starting to go "parabolic." Commodity rallies typically end with a big blow off and stories like this one by the mainstream financial media, questioning where the world will ever find enough sugar to meet demand.

click to enlarge

Sugar mania is running wild!

(Source: Barchart.com)

If you are an adventurous trader, you could initiate a long position and try to ride this spike up for as long as it goes. I personally do not have this stomach for this, having been burned one too many times on the inevitable reversal. Parabolic spikes rarely end quietly.

I hope that you, Dear Reader, played this trade better than I did. Since writing on March 1 that sugar could stage an impressive rally, my follow through trading was quite poor...to say the least.

Ah well, if you missed this rally - be patient. We should get another shot at it - at least according to our favorite sugar guru Jim Rogers, who told Bloomberg:

"Sugar is certainly going to go much, much higher during the course of the bull market,” Jim Rogers, chairman of Rogers Holdings, said in an Aug. 6 interview in Singapore. “Sugar is still 70 percent below its all-time high and not many things in life are 70 percent below what they were in 1974. Sugar has a wonderful future."

What's the easiest way to invest in agriculture if you don't trade futures? Check out our recent piece: 5 Easy Ways to Invest in Sugar...And Other Agricultural Commodities.

Comments

[logicalthought:]

I have a large position (and just bought more this morning) in Imperial Sugar (IPSU). The company lost 2/3 of its plant capacity in an explosion in early 2008 (hence the recent losses, much of which will be reimbursed via business interruption insurance). The new plant (fully paid for by insurance, with a replacement value more than the company's current market cap) will be fully operational this fall. I think the company (which is also a big consumer of now-much-cheaper natural gas) will make north of $2.50/share next year.

Aug 11 11:08 AM

[Donald Ingram:]

Always listen to What Mr. James Rogers has to say. To not do so is to do yourself a disservice. His insights and "gut" feelings over the years have proven to be winners. Go long on in the field of agriculture (excuse the pun - no intention meant) with your favorite choice of vehicle. The future is there.

Aug 11 11:35 AM

[LilBob:]

On Aug 11 11:35 AM Donald Ingram wrote:

Go long on ...agriculture with your favorite choice of vehicle.

I have to agree with you there. A lot of farmers bet big on bio-fuels and then lost their shirts when gas prices dropped and the bottom fell out of the ethanol market. A "sugar-high" (awful pun but you started it) could lead to strong corn-syrup and sugar beet prices and a resurgence in implement sales in the Midwest. Right now might be a good time to beat the rush on John Deere and Case/International Harvester shares.

Aug 11 05:51 PM

[sf123:]

What is the reason DBA is not going much higher with suger price going up a lot? Are the other three commodity in the portfolio all going down in prices?

Aug 11 07:01 PM