Quantitative Analysis /
Global

Sugar and stocks are not just for Christmas

  • International sugar prices have risen 39% in the past 12 months

  • Sugar futures are projected to increase a further 9.7% by end-2022 according to our machine-learning model

  • November through to the end of January has historically been the best-performing period for US stocks

Sugar and stocks are not just for Christmas
James Huckle
James Huckle

Quantitative Analyst

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Tellimer Research
26 December 2021
Published byTellimer Research

Sugar commodity prices

International sugar prices have risen 39% in the past 12 months, according to the FAO (Food and Agriculture Organization of the UN), comfortably outpacing global inflation. AB Foods CEO George Weston believes that this is primarily due to frost and drought hurting production in Brazil and soaring demand for sugar cane as biofuel by Brazil and India, the world’s top two sugar producers.

Many other food prices have witnessed sharp increases, but demand for meat and dairy remains somewhat subdued – as detailed in our recent article.

Food prices chart

Sugar futures have risen 29.1% over the past 12 months. We have subjected them to our machine-learning model this week to see if banishing your sweet tooth might be a worthwhile new year’s resolution on financial grounds alone.

Machine-learning 12-month forecast

Sugar future prices are expected to hit a low of US$17.00 per 50 imperial tons (50.8 metric tonnes) by March of next year, according to our machine-learning forecast, before continuing their bullish trajectory that started in early 2020. Prices are expected to be met with selling pressure at cUS$22.70 (the top of the channel) and, consequently, land at US$21.30 by the end of next year – a 9.7% increase from current levels.

Stocks bring Christmas cheer

You can tell the children, the "Santa rally" is real. And November through to the end of January has historically been the best-performing period for US stocks (and many other major markets). It is also clear that the old adage of “Sell in May and go away” certainly holds statistical merit, with the beginning of October looking like a great time to jump back in – resulting in a 7-month holding period.

Performance by month for US stocks