It's time to keep an eye on sugar

This is an abridged version of our Kaeppel's Corner.

Sugar is a highly seasonal market 

The chart below displays the annual seasonal trend for sugar futures (ticker SB). The beginning of the highlighted seasonally unfavorable period begins at the close on 2023-02-22. 

The chart above shows that this market tends to experience weakness in the first half of the year and strength towards the end of the year. The chart below shows that sugar enjoyed the typical late-year strength during the favorable seasonal window starting in late September 2022.  

Using an ETF as an alternative 

The chart below displays the growth of $1 invested in CANE only during TDY #35 through TDY #87 for Sugar futures. 

Note that a trader would need to sell short shares of CANE or trade options on CANE to play the short side. It is important to note the potential risks involved in either play. 

What the research tells us… 

Sugar is a highly cyclical market. It tends to show weakness in the first half of the year and strength during the second half. This market will soon enter a period that has often seen SB futures show weakness.

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