Call The Sheriff - We Need Order In The Sugar Market! (SGG)
By Scott Rubin
Benzinga Staff Writer
January 06, 2011 13:37 PM
f you have been participating in the sugar rally of 2010, it has likely been an exhilarating, possibly quite profitable, and at times, downright scary ride. Sugar prices started the year off strong, before taking a big dip in late Winter and Spring.
The market found its lows during the Summer months, and in July a massive rally got underway with a slight uptick in prices. By Fall, sugar prices had exploded and were hitting new highs on an almost daily basis.
Then in November, inevitably, sugar futures plunged the most in one day in 22 years as global commodity markets were slammed on fears about an imminent Chinese rate hike. That day, it turns out, was an excellent buying opportunity, as Sugar roared back to new highs by the end of December.
It appears that a new correction is underway, however, as Sugar futures are plummeting to start the new year. During Thursday's trading session, Sugar #11 contracts have slid 5.19%. The iPath Dow Jones - UBS Sugar Subindex Total Return ETN (NYSE: SGG) has lost 5.55% to $88.18.
Just a few days ago, the SGG hit a high of $101.30 before another wave of volatility swept over the global sugar market. The violence of the recent moves are a testament to just how powerful the move in the sweet commodity has been.
Only time will tell if this most recent sell-off is another buying opportunity, but considering the ongoing rally in global commodity markets, and the fundamental tightness in the sugar market, this ETF may be worth a shot from the long side.
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