Food Commodities Bounce Back: 1st Sugar, Now Soybeans

11/08/2024

2 minutes read

2024.11.08 03:03

It should come as no surprise that I have been watching carefully for years.

As the 3rd in my trifecta of inflation indicators, sugar has been sitting in wait.

However, the chart looks incredible, but we will get to that in a moment.

Sugar Price Chart

My bigger point is, the food shortages from weather, geopolitics, tariff wars, lower rates, higher demand, and so on tell me that 2025 we could see a huge spike back up in all food prices.

For now, though, I like both sugar and .

Some Fundamentals

Last Friday’s weekly Commitment of Traders (COT) report showed funds boosted their net-long positions at the end of October to the most long positions since data began in 2011.

Weather factors are mixed with recent drought and excessive heat causing fires in Brazil that damaged sugar crops while India and Thailand report good crop production.

The USDA forecasts that 2024/25 global sugar ending stocks will fall to a 13-year low of 38.339 MMT.

Moving our attention to soybeans… Soybean Futures Price Chart

The recent export Sales report showed soybean on the high end. While that was a 3-week low, it was still 88.7% above the same week last year. The largest buyer was China.

With a smaller expected production, US ending stocks are expected to slip lower in the upcoming WASDE update, with analysts looking for a reduction. The world soybean stocks are seen as tighter.

Let’s look at the charts:

The sugar chart is the March contract.

Note the giant bull pennant.

Over 22.50, we will see a second confirmation of a breakout and a continuation of the rally that started in 2020.

The price held the 50-DMA in blue.

The phase is bullish.

Looking at the soybeans chart, this is the spot month contract.

We see four bottoms in place since August.

Today, the price cleared over the 50-DMA for a phase change to recuperation.

The momentum indicator Real Motion shows a bullish divergence.

And the Leadership indicator tells us that soybeans could be ready to outperform the or benchmark.

Yes, the Fed eased. But these are trends that have been in place since Covid-only with corrections.