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Sugar Continues To Dissolve


  • A bear market since October 2016.
  • A weekly close below 11 cents per pound.
  • Glut conditions and a weak Brazilian currency sends sugar lower.
  • A long-term pattern in danger.
  • The bottom of a pricing cycle means risk/reward favors the upside.
  • Members of my private investing community, Hecht Commodity Report, receive real-time trade alerts on this idea and many more. Learn more today >>

Sugar is a staple commodity that is an ingredient in candies, cakes, jellies, and other foods we consume on a daily basis. Technology has created the ability to produce fuel from the raw form of the sweet commodity. In Brazil, the world's leading producer of sugarcane, sugar-based ethanol powers automobiles and has made the South American nation the world's leader in ethanol exports.

Sometime around 8000 BC, the people of the South Pacific island of New Guinea first domesticated sugarcane. In 500 AD India became the first location where sugar in a solid form became popular. Greek and Roman civilizations used sugar for medicinal purposes rather than as a food additive.

In 1747, German chemist Andreas Marggraf identified sucrose in the sugar beet root, which established a new source for the sweet commodity. Therefore, sugar production moved from only tropical climates that support the growth of sugarcane to more temperate growing locations. While there is lots of evidence that sugar consumption contributes to a host of medical problems including diabetes and other ailments, the soft commodity continues to be a primary food essential in today's world.

The price of sugar can be highly volatile. Many producing countries support local sugar producers via subsidies and tariffs on imports. However, sugar trades in the free market on the Intercontinental Exchange and the weather and crop conditions in critical growing areas around the world can cause massive swings in the price of the agricultural product. Since 1971 the price of sugar has traded from lows of 2.29 cents to highs of 66 cents per pound.

A bear market since October 2016

In August 2015 the price of nearby sugar futures on the ICE Exchange traded to lows of 10.13 cents per pound under the weight of oversupply of the sweet commodity. Sugar made a

The Hecht Commodity Report is one of the most comprehensive commodities reports available today from the #2 ranked author in both commodities and precious metals. My weekly report covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. More than 120 subscribers are deriving real value from the Hecht Commodity Report.

This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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