A lot of people don't realize it, but Brazil uses all sugar-based ethanol to run their vehicles. This makes them less reliant on the Middle East unlike us here in the United States. In 2010, Brazilian distributors are expected to sell more ethanol than gasoline, the Gazeta Mercantil newspaper said. The popularity of flex-fuel cars in the country will help ethanol sales over reach gasoline sales.
Fundamentally, we still currently have excess supplies. This is part of the reason why we've had this downward trend over the last couple years. However, any supply problems going forward from here gives the market really potential to move up. On Thursday, September 27, ICE/NYBOT sugar #11 March futures traded near 10.19 cents a pound. This market has been as high as 19 cents back in January, 2006.
If you look at the chart below, I think this is a huge bottom. We have broken the trend line. I would be accumulating sugar long term. In my opinion, the true economic value of sugar is between 14-15 cents. Over the next year, I'm looking for sugar to possibly double. I don't think we can go much lower than 8.37 cents so I would suggest placing your stop near that area if you are looking long term in this commodity.
Fundamentally, we still currently have excess supplies. This is part of the reason why we've had this downward trend over the last couple years. However, any supply problems going forward from here gives the market really potential to move up. On Thursday, September 27, ICE/NYBOT sugar #11 March futures traded near 10.19 cents a pound. This market has been as high as 19 cents back in January, 2006.
If you look at the chart below, I think this is a huge bottom. We have broken the trend line. I would be accumulating sugar long term. In my opinion, the true economic value of sugar is between 14-15 cents. Over the next year, I'm looking for sugar to possibly double. I don't think we can go much lower than 8.37 cents so I would suggest placing your stop near that area if you are looking long term in this commodity.
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