When Sugar is Not So Sweet

  • SumoMe

OK, I will grant you that when it comes to the financial markets, sugar is not everyone’s “cup of tea” (although for the record, its pretty good “in” a cup of tea, but I digress).

So maybe the following will be useful or maybe it will be “a fun fact to know and tell”, but whatever – here goes:

Figure 1 displays the cumulative gain/loss for holding a long position in sugar futures between the end of March Trading Day #9 and the end of April Trading Day #10 starting in 1978.

1Figure 1 – Cumulative $ +(-) for Sugar futures between the end of March Trading Day #9 and the end of April Trading Day #10 (1978-2016)

(See also Speculating in T-Bonds)

For the record:

*# time UP = 13 (33% of the time)

*# times DOWN= 26 (67% of the time)

*Average $ gain during UP periods = +$681

*Average $ loss during UP periods = (-$1,283)

(See also March – ‘Springtime for Retailers’ (typically))

Summary

So is sugar destined to decline between March 13th and April 14th this year?  Not necessarily.  In fact this “seasonally unfavorable” period has seen sugar futures decline during each of the last 7 years.  So maybe it is time for a rally this time around.

But the real point is that anyone looking to speculate on the long side of a commodities market might want to  look for an opportunity with slightly higher odds of success.

Jay Kaeppel

Disclaimer:  The data presented herein were obtained from various third-party sources.  While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.  The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.

 

 

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