In examining the agricultural commodities space recently, the ETF issuer Teucrium helped make us aware of a seasonality trend that they routinely track in the Sugar markets.
We note from historical price tables that sugar prices typically (but not always) reach their maximum low point somewhere in between April and June of each year.
This is caused by one of the largest producers in the world, Brazil, reaching their peak harvest during this time of year. We are told that nearly a full year’s worth of sugar supply is delivered to the market over an 8-12 week period during this harvest, and therefore, the influx of supply of sugar on the market often causes prices to plunge, as one would naturally expect.
The absolute price of sugar often takes a hit during this time of year, as does the average annual price of sugar. On the flipside, Teucrium notes, sugar tends to soar to its absolute price high as well as see its average annual price positively diverge during the February through September timeframe.
If one looks at a chart of Teucrium Sugar Fund (NYSEArca: CANE), an ETF which invests in Sugar futures contracts in attempts to track the spot price of the commodity, one can clearly see that current price levels in the product are near its all-time
lows.