True or False -- Crude oil prices move in step with sugar prices. Reason being, the higher the cost of oil, and the greater the demand for alternative fuels such as cane-based ethanol.
Answer: That depends on whom you ask. According to the mainstream financial experts, the above statement is 100% spot on -- as the following news items affirm:
- “Soaring oil a blessing for sugar industry… The prices of the two commodities are highly synchronized. When oil climbs in price so does sugar as you realize there is a global shift towards cleaner fuels.” (March 6, 2008 AllAfrica.com)
- “Sugar appears poised to reap the records of high energy prices.” (July 9 Reuters)
- “Sugar futures fell in sympathy with oil.” (September 23 Reuters)
According to historical data and actual fact-based reality, however, crude AND sugar prices are about as synchronized as a dolphin and a duck-billed platypus. Case in point:
From a fresh contract high on March 7, 2008, SUGAR prices turned down in a three-month long sell-off that slashed 40% off its value. All the while, Crude oil enjoyed an uninterrupted winning streak above the record setting height of $100-, $110-, $120-, and $130-per barrel.
Flash ahead to today, September 23: Sugar’s most recent descent to a three-month low got started on August 1; crude oil prices kicked off their southern slide on July 11.
The only thing that is consistent about fundamental analysis of the world’s leading financial markets is its inconsistency. As for objective, original, and disciplined insight into where SUGAR prices could be in the days ahead, the September 24 Daily Futures Junctures has exactly that.
In the latest DFJ publication, Elliott Wave International’s senior commodity analyst Jeffrey Kennedy reveals that price action since late August has unfolded as a classis flat correction.
Here, Elliott Wave Principle – Key To Market Behavior draws the FLAT out: “The word Flat is used as a catch-all name for any A-B-C correction that subdivides 3-3-5. In a regular flat correction, wave B terminates about at the level of the beginning of wave A, and wave C terminates a slight bit past the end of wave A.”
And, according to Jeffrey’s analysis, sugar needs only to see “one more move” before the embarking on what Ralph Nelson Elliott himself described as “a wonder to behold.”