Looking For A Stock Market Hedge? This ETF Tracks A Commodity Expected To Rise

Zinger Key Points
  • CANE offers investors a convenient way to track the price of sugar futures within a brokerage account.
  • Analysts expect the price of raw sugar to increase due to a lack of growth in India's production of the commodity.

Teucrium Sugar Fund ETF CANE was consolidating slightly lower on declining volume Tuesday, continuing within its downtrend, which began on Feb. 12.

On Feb. 14, 12 traders and analysts polled by Reuters indicated they expect raw sugar to close 2024 at 24.5 cents per lb –up about 20% from the 2023 closing price. While Brazil’s sugar production remains on track, a lack of growth in India’s sugar production is likely to be the contributing factor to a global supply glut, according to trader and supply chain services company Czarnikow, Reuters said.

The demand for sugar is rapidly increasing due to population growth and the expanding global middle class. The commodity plays a vital role in various industries worldwide, serving as a sweetener, fuel (ethanol), bio-material, ink, cement, glue, and alcohol.

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CANE offers investors a convenient way to track the price of sugar futures within a brokerage account and because historically, sugar doesn’t move in tandem with U.S. stock market trends, CANE could be an appealing choice for traders wishing to diversify their investment portfolios.

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The CANE Chart: CANE formed a lower low within its downtrend on Tuesday, falling to hit the lower trend line of a descending channel. When the ETF dropped to its low-of-day, buyers came in and bought the dip, which caused CANE to look to print a dragonfly doji candlestick on the daily chart, which may indicate the local bottom has occurred.

  • A descending channel pattern is considered to be bearish until a security breaks up from the upper falling trend line on higher-than-average volume. If CANE continues to bounce on Wednesday, bullish traders want to see the ETF break up from the channel, which would cause the ETF to regain the eight-day and 21-day exponential moving averages (EMAs) as support.
  • Bearish traders want to see CANE reject the upper trend line of the pattern, which would suggest the downtrend is likely to continue. If CANE falls further, the 50-day simple moving average is likely to act as support at least temporarily.
  • CANE has resistance above at $13,91 and at $14.23 and support below at $13.40 and at $13.04.

Photo by Tyler Prahm on Unsplash

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