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’‘The real sugar community’ vs ‘parasitic computer-based traders’
The FT reported on Wednesday that an industry body representing big sugar traders has launched an attack on their high-frequency and algorithmic-based counterparts — along with the New York-based futures exchange that hosts both groups.
Sugar-coated losses
Monday turned out to be quite a day for ICE raw sugar prices. According to Reuters, the soft commodity suffered its worst single-day loss in nearly two years on liquidation pressure from investors following a run-up to 29-year highs over the last year.
China cools on the commodity front
You know how China has bolstered hopes for global growth, with its command-stimulus programme sucking in raw materials, supporting commodity prices and generally making the world feel better?
Well, it’s over.
Sweet returns – the prospects for sugar
Sugar is ascending.
Reasons are varied and include the effects of a weaker dollar, stronger oil prices and increasing demand for ethanol.
But the key bullish factor has been a much larger than expected seasonal production deficit due to growing crop shortfalls from the world’s two top producers Brazil and India – and that’s down to the weather.
Give me some sugar
Sugar was one of the best performing commodities up until circa November 2008, when it finally capitulated in terms of year-to-date returns.
But, it seems, the sweet stuff may be back. From Dresdner on Thursday:
Sugar caned
Sugar, formerly the only commodity to post a positive return this year, has finally capitulated.
From Deutsche Bank’s most recent Commodities Weekly note:
And this was the chart from just 10 days ago: