Here’s Why Hedge Funds Are Sweet on Sugar

November 10, 2015, 7:25 PM UTC
Sugar Cane Harvesting At US Sugar Corp.
Raw sugar sits in a warehouse before processing at U.S. Sugar Corp.'s facility in Clewiston, Florida, U.S., on Wednesday, Feb. 1, 2012. Global sugar supply will match demand in 2012-13, compared with a 4.5 million metric tons surplus in the current season, according to the London-based International Sugar Organization. Photographer: Jim Stem/Bloomberg via Getty Images
Photograph by Jim Stem — Bloomberg via Getty Images

Some investors are going all in on sugar.

Commodities might be in a deep rout, but raw-sugar futures prices have rallied to the market’s largest gain in four years, according to The Wall Street Journal.

The sugar market has until recently been mired in a years-long price decline, but it’s rebounding thanks to global consumption outpacing production. Now, the International Sugar Organization expects the year to result in a “statistical deficit.” Plus, it helps that the currencies in India and Brazil, some of sugar’s biggest producers, have seen modest improvement. Previously, in early 2015, a declining Brazilian real drove sugar prices down by prompting producers to up activity, according to The Journal.

But despite the optimism, some investors caution that the pile-on went too far, and that futures pricing is now removed for true transactional pricing.

Read More

CryptocurrencyInvestingBanksReal Estate