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[Lavanay]

In 1974, the price of sugar was 66 cents. Then it collapsed to almost 2 cents in 1985. For the next decade, sugar was stuck at a dime or less.
In the last year, the price of sugar has doubled—and the value of a white sugar futures contract has quadrupled.
 
This breakout has been two decades in the making:

 
      First, Brazil got smart and decided to dominate sugar production while stabilizing prices by diverting all over-supply into ethanol.
 
      Meanwhile, sugar demand rose 63% in the last 20 years, largely driven by huge increases in consumption in Asia. And supply has shrunk in Europe, Africa, even Asia. Exports of sugar from the EU, for example, have collapsed from 7 million tonnes a year in 2005 to less than one million in 2007.

      And finally, oil prices went stratospheric—and remain so high, sugar-based ethanol prices are up over 250% since mid-2004!

The case for sugar is compelling today, but I don’t want you running around out there trying to buy sugar futures!
 
Unless you have a cast-iron stomach, you should steer clear of futures.
If sugar has been so low, so long, isn’t a collapse possible again?
 
Yes—if Asia stops growing. Yes—if the price of a gallon of gas goes back to 33 cents. Those are odds I find very acceptable.