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5/15/08 Sugar futures prices are trading
sideways. The International Sugar Organization estimates that
the world produced a 8 million ton surplus in 2007-08 which is
down from 9.3 million tons. Expectations for 2008-09 is for a
small deficit. Sugar option premiums are average.
5/9/08 Sugar futures prices rallied this
week based on record high gasoline prices and a weakening US
Dollar. The USDA supply and demand report showed US ending
stocks at 1.336 million tons down from 1.757 million tons in
2007-08. Sugar option premiums are about average.
5/1/08 Sugar futures prices are selling off
again this week based on a lack of news being considered bearish
and Brazil's expectation of a larger crop than originally
expected. Sugar option premiums are average.
4/25/08 Sugar futures prices are selling off
this week based on a lack of any bullish news and the decline in
unleaded gas prices from its high. There is a relationship
between gas prices and unleaded gas because the sugar in Brazil
is used to make ethanol. Sugar option premiums are above
average.
4/18/08 Sugar futures prices have been
rallying this week based on fund buying and the new record high
for unleaded gas. Brazil is predicting that 58% of its sugar
crop will be turned into ethanol. Sugar option premiums are
above average.
4/11/08 Sugar futures prices have been
rallying this week following unleaded gas prices and an overall
strength that is returning to the commodity markets. The massive
sell off during St. Patrick's Day through March 21st was based
on panic and a need for liquidity and not supply and demand. The
USDA reduced ending stocks of sugar from 1.978 million tons to
195. Sugar options premiums are becoming fair again.
4/4/08 Sugar futures prices have been a yawn
recently as prices are drifting sideways. Sugar did rise
slightly this week in the wake of the strong unleaded gas price
move. This relationship based on ethanol had been more
correlated until recently. Sugar option premiums are average now
based on the lack of volatility in sugar futures prices.
3/28/08 Sugar futures prices have been
languishing this week without any new fundamental news to
attract buyers. High unleaded gas prices have been supportive
and sugar option premiums are above average.
3/21/08 Sugar futures prices kept falling
this week as Wall Street hedge funds and commodity funds
liquidated futures positions to cover margin calls in stocks and
to pay back borrowed money. The Bear Stearns issue took the
confidence from investors. The Fed's 75 basis point cut
surprised investors because a full 100 basis point cut was
expected. Sugar option premiums are high.
3/14/08 Sugar futures prices bounced back
after the correction. The new lows for the US Dollar and
Brazilian ethanol production have affected prices. The US ending
stocks went from 2.029 million tons to 1.978 according to the
USDA's estimates. Sugar future prices are still way off from the
all time highs around 66 cents. Sugar option premiums are high.
3/7/08 Sugar futures prices sold off 2 cents
this week leading the massive fund liquidation in the softs
sector. China is expecting sugar deficit because of poor growing
conditions this year. Sugar option premiums are high.
2/29/08 Sugar futures prices rallied to
contract highs this week based on inflationary fears and all
time high unleaded gas prices. The potential 50 basis point
interest rate cut at next month's FOMC meeting pressures the
dollar which also helped buoy prices. Sugar option premiums are
high.
2/22/08 Sugar futures prices followed crude
oil and unleaded gas up this week to new contract highs. Some
private firm estimates say that the global sugar surplus is
dwindling rapidly because of ethanol demand and a growing world
population. Sugar option premiums are still fair.
2/15/08 Sugar futures prices made a contract
high this week in spite of India's recovery rates being higher
offsetting some of their reduced harvest output. There was also
major fund buying in the May and July sugar futures contracts.
The global push to use bio fuels is helping use up the surpluses
of sugar around the globe. Crude oil and unleaded gas futures
rallied this week lending support to sugar prices. Sugar option
premiums are expanding but still relatively fair.
2/8/08 Sugar futures prices broke out to the
upside based on higher gasoline prices and an explosion in a
sugar refinery in Georgia. Higher consumption by India and China
are expected by some analysts to create a deficit in sugar
supplies soon. Sugar futures prices are near 13 cents. Sugar
option premiums are expanding quickly.
2/1/08 Sugar futures prices are
consolidating sideways around 12 cents. Brazil is the world's
largest exporter of sugar and they are producing ethanol with
the sugar because of its higher profit margin. This means that
there is less sugar to export as a food. Many countries are
converting sugar cane fields into wheat fields because of the
record wheat prices. Sugar option premiums are above average.
-T & K Futures and Options Inc.
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