August 2009

Drought to More Than Triple India’s Sugar Exports

                   ~Pratik Parija, August 5, 2009, Bloomberg.com

Malaysian State Affected by Sugar Shortage

                   ~channelnewsasia.com

Mexico Fixes Sugar Import Trade

                   ~reuters.com, August 5, 2009

India, the largest consumer of sugar and the fourth largest producer in the world may more than triple sugar imports due to recent dry weather in key growing areas of the country.  This caused raw sugar prices to jump to a three-year high in New York and a twenty-year high on white sugar in London.

“Global prices have gone beyond our reach.” said Prakash Naiknavare, managing director of Maharashtra State Cooperative Sugar Factories Ltd.

Mexico is believed to be close to an agreement to import 400,000 tons of refined sugar.  Mexico’s local sugar output has been compromised by recent drought conditions.

Notice some key aspects of the above headlines and information.  See any similarities to these news tidbits and Rice headlines mentioned in the book, ChartSmith, Forging Your Financial Future? 

We are currently watching for a top side entry to short the sugar market. 

Headlines like these are the precursor to a super heated, overvalued commodity market that is soon followed by a precipitous fall.  Remember, Bulls walk up the stairs; Bears jump out the window.  As more and more sugar shortage headlines emerge the general public feels the panic and goes “long” the market.  The big money needing to reverse positions and take profit yells, “FIRE!” and everyone runs for the exit.  This type of trade set up is one of our favorites so keep a watchful eye, you’ll be glad you’re closest to the exit.

Full details on trading historically high commodity markets are covered in ChartSmith, Forging Your Financial Future.