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

As the 3^rd 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.

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 soybeans.

Some Fundamentals

Last Friday's weekly Commitment of Traders (COT) report showed funds boosted their net-long London sugar 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…

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 SPY or benchmark.

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

Sugar of course is the more interesting.

But with beans along for the ride, inflation concerns only increase.

ETF Summary

(Pivotal means short-term bullish above that level and bearish below)

S&P 500 (SPY) 610 here we come

Russell 2000 (IWM) 227 support 244 the area to clear

Dow (DIA) Very narrow trading range at the highs

Nasdaq (QQQ) 500 support 530 resistance

Regional banks (KRE) Inside day after the big run

Semiconductors (SMH) 260 pivotal

Transportation (IYT) 71 now key to hold

Biotechnology (IBB) Looks strong-especially now over 147-150 next level

Retail (XRT) 76 support 80 to clear

iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 pivotal

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