Agriculture commodities have been solid though overshadowed performers this year. The same sentiment can be extended to sugar exchange traded notes (ETNs), including the iPath Bloomberg Sugar Subindex Total Return ETN (NYSEArca: SGG) and the Teucrium Sugar Fund (NYSEArca: CANE).
India, the world’s second-largest sugar producer, could turn into a net importer for the 2016 to 2017 season after a wetter monsoon this year was unable to offset the previous two dry years., with production falling to less than 23.5 million metric tons. Heat and drought due to the worst El Nino weather in six decades have decimated Thailand’s sugar production, which officials now expect to be reduced by 14% compared to last season, the Wall Street Journal reports.
Related: Sweet or Sour for Sugar ETFs?
SGG and CANE are other tactical, but sometimes volatile offerings in the agriculture commodities space.
SGG’s “recent close near the trendline is creating an extremely lucrative risk-to-reward setup and many will likely use it as a guide for placing their buy and stop-loss orders,” adds Investopedia.[related_stories]
Sugar futures have been one of the best markets for trend following traders this year, as prices have been in a sustained up-move since February. This performance has garnered the attention of large speculative traders who have amassed a huge net-long position in the Sugar market while adding to positions as prices move higher,” according to OptionsExpress.
SGG, like other commodities products, is benefiting from the slumping U.S. dollar. However, some believe the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), which tracks the price movement of the U.S. dollar against a basket of currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, is still stumbling as the Federal Reserve holds off on raising interest rates.
Looking at the daily chart for October Sugar futures, we notice what has the potential to be a double-top formation. This generally bearish technical pattern would need to be confirmed by the market closing below chart support seen at the July 29 low at 18.71, preferably on higher than average trading volume. This pattern would be invalidated on a close above the most recent high made back on June 30 at 21.22,” adds OptionsExpress.
For more news and strategy on the Agriculture market, visit our Agriculture category.
iPath Bloomberg Sugar Subindex Total Return ETN
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.