The speculators in commodities are salivating again as sugar prices start climbing past their old highs.
The reasons quoted in today’s news articles are:
- DROUGHT IN INDIA
- RAINS IN BRAZIL
- RAINS IN MEXICO
The World Crop is either desiccated in India or rotting in Brazil.
There are other reasons, just as important as the weather.
It makes little difference to the consumer, whether sugar costs 20 cents per pound or 40 cents per pound. A pound may last a week. In a year the difference in cost may reach 10 dollars. Not important.
Some products are used less if their price rises.
If a TVÂ screen costs 1000 dollars instead of 500 dollars, you will keep your old 500 dollar screen. That is an ELASTIC DEMAND. It goes down when the price goes up.
But, if SALT were to cost $200 per pound instead of $100 per pound, people would pay the price. Salt is so important to health and diet, people have killed to obtain it. That is an INELASTIC DEMAND. People will pay any price for the product. Another good example is a medicine that will save your life.
WORLD WIDE NEED
The demand for sugar is World Wide. Every person on the globe wants and uses sugar. It is a commodity that has a universal market.
There are over seven BILLION people on the planet. The price of all commodities are rising.
In my mind, sugar is a good opportunity to make a profit.
I could be wrong.
I could be right.
(Re-edit: TODAY JANUARY 31, 2010 SUGAR IS 30 CENTS LB! This was first posted October 1, 2009)