Free Currency Charts Free Forex Charts
Morning Briefing

Special Report on Sugar

23rd Feb, 2006

Sugar prices are moving up after 25 years. Will history repeat itself?

The last time the prices were at current levels was in 1980. Actually, Sugar has only traded at such levels twice since 1965. The first time was in 1974-75, when there was a rally from under 12 cents/lb to 66 cents/lb in a matter of 10 months. The second time was in 1979-80, when it was a participant in a global commodities rally. That time also, the rally took off from 12 cents/lb but it topped out at 45.75 cents/lb, again in a matter of 10 months.

However, the point to note here is that, there was a sharp collapse in the prices on both occasions. In 1975-76 there was a fall back to 12 cents/lb in 8 months after the top. Similarly, the rally of 1979-80 also busted and there was a fall back to 12 cents/lb in the next 11 months. That rally also ended where it had started. In fact there was a continuation of the slide and there was a fall to 3 cents/lb by 1985.

This time, Sugar prices crossed the 12 cents/lb level in Dec 05 and are currently trading near 18 cents/lb.

As seen in the chart above, global Sugar prices have seen two major boom-bust cycles, since 1966.

Remarkably, both cycles seems to have taken panned out exactly similarly in terms of the time taken for each rise and fall. This can be seen in the chart alongside, where we've superimposed the cycles on each other.

Even more remarkably, the current upmove seems to be following the time pattern of the earlier cycles to the T.


In the table below, we examine the percentage moves and time taken for each phase of the boom periods of all three cycles, namely 1972-76, 1978-82 and 2004-Current

Clearly, both the earlier Cycles have had a similar Act I - Scene I (1st Upmove) and Act I - Scene II (Correction) and Act I - Scene III (2nd Upmove). The Time taken during each Act and the percentage moves in each have been more or less similar. The same thing seems to be happening this time around. The eventual fall, or "bust", still in the distant future as of now, will be Act II, of course.


How far can the current correction go?
In the earlier cycles, the Feb-Mar corrections saw prices fall an average of 31% from the top or 45% of the entire first upsurge. A similar correction this time can bring prices down towards 12.50-13.50 cents/lb.

That said, since 12.0 cents/lb was earlier a "breakout level" in the current big upmove, a correction down to that level now could provide a very good buying opportunity.

Back Previous Report | Next Report Next

 
Bookmark and Share


Dollar-Rupee Long term Forecast
Our Oct'16 Longterm forecast is now available. To order a PAID copy, please mail us.
In order to read our previous forecasts please Click Here.


Indian Rupee Market | FX Thoughts | Economic Calendar | Graphs Gallery | Colour of Money | Money Markets | Research | Risk Management | Government Policies | Utilities & Humour | Free Data | Your Queries | Testimonials | Links | About Us | Site Map


info@kshitij.com
http://www.kshitij.com
Copyright Kshitij Consultancy Services
Suite 2G, 2nd Floor, Tower C
Hastings Court
96, Garden Reach Road
Kolkata - 700 023
INDIA
00-91-33-24892010/ 24892012
Location Map
Site created by
Manaskriti Software Solutions