Brazil’s Rate Cut and Your Sweet Tooth

Much of the financial world yesterday was abuzz over Brazil’s surprise rate cut. While those trading Brazil Real futures contracts (with a whopping volume of… wait for it… 19 as of 11 AM CST today) might care about how the about-face impacts the value of the currency, the bigger question rattling around the futures world is how this might impact the price of sugar.

Brazil is easily the world’s largest sugar producer, responsible for over 20% of the world’s sugar production. Unfortunately, rumors have circled that this year’s crops are weaker than usual, and the surprise rate cut during a time period where Brazil has supposedly dedicated itself to battling inflation has some wondering whether or not the crop is even more meager than we’d initially thought. Sugar, so far, has reacted to the news by sliding ever so slightly after treading water yesterday. Where it goes from here is anyone’s guess.

Brazil may be known to most for Carnivale, Christ the Redeemer looking down over Rio, and their reliance on ethanol to fuel their cars, but to those trading futures, it’s one of a dozen or so nations with the ability to sway the markets, either by policy, report or being plagued by violence and weather. These kind of macro movements are monitored closely by traders, as they can quickly swing the price of a contract in one direction or another. Who/what has the muscle to cause a movement? Let’s look at it by contract:

Market

Muscle

Example

Cocoa Ivory Coast Upheaval Violence in April
Coffee South American Weather and Politics Chavez Coffee Takeover, Irene
Wheat America, Russia, Australia, Weather Russia Lifts Export Ban,  Drought
Soybeans America, Japan, Weather Dry Growing Conditions, Japan Demand
Corn America, Weather, World Demand Ethanol Policies, Export Sales Forecast
Oil Politics/Violence (Mid. East/Africa), Demand Libya, Global Demand Slide
Orange Juice Florida Weather Hurricane Season

This list, while not exhaustive, gives you a glance at all the moving pieces a pro has to keep track of while trading. These kinds of indicators are, by nature, usually unpredictable, so while they are important to track, even the discretionary managers on our roster still rely on technical indicators in addition to the macro perspective.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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