Sugar – consolidation phase nearing a decision point

Before discussing the current market, we want to step back for a moment to our June 7, 2004 report in which we opined … “There is a trendline on the monthly continuation chart of sugar that stretches all the way back to the peak in 1995 at ca. 16 cents and slopes gently downward to 8.60 cents. Beneath this line is a world of accumulation and base building that has taken place over the years. We feel it is only a matter of time before this long-term trend line is broken, opening the door to a substantial rise in sugar prices over the next few years.”

Since that report, prices have increased roughly 120% (to 18cts from 8cts). The performance of sugar has been nothing short of outstanding — in absolute terms, in relative terms, and in terms of underlying conditions, as open interest has climbed steadily along with rising prices (chart page 2).
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