Sugar’s Sweet to ETN Investors

By Brad Zigler

Friday was an exceptionally sweet day for ETN investors. Certain investors, that is. Specifically, those who own exchange-traded notes tied to the price of sugar.

PitGuru’s chief analyst Jurgens Bauer had a hard time recalling the ticker symbol for these securities in a recent HAI interview (“Jurgens Bauer: Global Sugar Deficit Coming”), but we know the iPath Dow Jones-UBS Sugar Sub-Index ETN (NYSE Arca: SGG) well enough to notice it rang up a 2.9% gain Friday. The move pushed the notes above the $65 ledge where sellers had been perched last week.

A lot of Bauer’s deficit talk had been baked into recent SGG’s price action. As sugar prices reached highs last seen three decades ago, SGG shares climbed above $74 before breaking down at the beginning of the month.

The easing is more likely a pause than a reversal, if history is any guide. More on that in a second. For now, let’s note the technical indicators. MACD’s negative, but is turning neutral, while RSI and stochastics are bullish. Most significantly, volume spiked higher on Friday’s upside reversal.

SGG needs to keep closing above $64 to maintain its upward momentum. Historically, that’s more likely than not, as sugar tends to rise in the late October-November period. And that should foster additional gratitude among ETN investors as we approach Thanksgiving Day.

*Note: The monetary inflation rate is calculated daily and represents the change in our proprietary index over the last 12 months. We update long-term inflation in real time as well. Since 1999, the compound annual growth rate in our index is 4.9%.

Comments

[Crude Oil T...:]

Agreed, just a pause in sugar. This will be a "super cycle" in sugar lasting for a matter of years, not months. Buy the dips!

Sep 29 03:30 PM

[keithpiccir...:]

Thanks for the article.

Sep 30 09:52 PM