Price inflation, both the news and the fear, is omnipresent nowadays. We have seen price appreciation in key commodities like energy, wheat, corn, and so on. But what about sugar? We have not seen a significant rise in the price of sugar in the last 12 months approx. Is it fair to forecast that sugar is next to start a move higher?
Truth to be told, we have no clue about the supply / demand dynamics in the sugar market. So, whatever we are writing in this blog post is purely based on commodities trends as well as the sugar price chart.
First of all, food price inflation is for real. The macro environment is pushing several food commodities much higher lately. Stated differently, IF there is a moment for a commodity like sugar to appreciate in price, it should be in 2022.
Next, the sugar price chart.
We need to zoom out and check the monthly chart in order to understand the dominant pattern.
The monthly sugar price chart has a very clear bullish reversal that started with the sell-off in 2012. We got a spike in 2016 which seemed to be the 2nd leg of a giant W structure.
Right now, sugar is consolidating. There is a very high probability that it is working on a breakout. We consider the 0.22 – 0.24 area the breakout level.
Although the price of sugar is range bound for almost a year now we can easily see that this might come to an end in the not too distant future.
How to invest in the potential price appreciation of sugar? An accessible ETF with decent daily trading volume is likely the lowest risk way to park some of your hard earned money in this trend.
But remember to protect yourself, in case sugar falls below 0.17 it might be questionable if sugar is ready to rise. Maybe it won’t, there are always to sides to consider.
On the flipside, if the breakout succeeds we see at least a 50% upside potential in the price of sugar, if not more. A slow but steady investment is how we think of sugar price investing.
