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Sugar - 1999 Low



When commodities approach historic lows or multi-year lows, it may be a good time to think about buying for a longer-term trade. This was certainly the case with Sugar in 1999. Sugar actually broke 4 cents and many people probably thought it would still go lower, however, it managed to rally above 11 cents in a 12 months. That tends to be the case when a market is well entrenched in a bear trend. The shorts try to hold on for a little more and many "would be" buyers are afraid to get into the market after seeing it down almost every day. Then something always seems to happen to turn these types of markets around. More and more buyers step in as they feel comfortable with the rising prices and the shorts scramble to cover and probably go long too.

To make things as simple as possible, the laws of supply and demand work so well in the commodities markets over the long run. Low prices normally create more demand and cure low prices. Vice-versa for high prices. It happens time and again in commodities where a market can dramatically swing from being very bearish to very bullish in a short period of time. Markets look worst at their lowest prices and best at their highest prices.


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