Sugar No. 11
- Thread starter circadian
- Start date
wondering what kind of impact this will have on coke and pepsi's earnings, too lazy to dig whether or not they fully hedge sugar prices
My 08 projections showed 23 as a long term target.
Technicals.
Coke and Pepsi for the most part use corn syrup not sugar. Corn syrup is a rather recent phenomenon, and can provide true competition to pure sugar.
What we need to know then is the substitution cost(s) for going from sugar to high fructose corn syrup (HFC in food industry parlance).
Anyone know? Able to find out?
What we need to know then is the substitution cost(s) for going from sugar to high fructose corn syrup (HFC in food industry parlance).
Anyone know? Able to find out?
Right, well the question is, how hard is it for producers worldwide who use sugar to switch to corn syrup? In the US we use corn syrup precisely because sugar prices are kept artificially high by gov't policies.
(Btw this backfires because corn isn't that healthy, but anyway...)
In the booms of the late Seventies the transition to corn syrup was underway but not as far advanced as now.
So what I'm saying is that maybe we don't see new all time highs, or maybe sugar has some cap on it's price, and that's about the price where corn syrup can substitute. Simple idea, but a little tough to figure out the real substitution price.
But if we can get a rough estimate then that can provide a general area where it becomes a little less dangerous to short, though I'd still only use puts or some kind of options spread like a put backspread.
(Btw this backfires because corn isn't that healthy, but anyway...)
In the booms of the late Seventies the transition to corn syrup was underway but not as far advanced as now.
So what I'm saying is that maybe we don't see new all time highs, or maybe sugar has some cap on it's price, and that's about the price where corn syrup can substitute. Simple idea, but a little tough to figure out the real substitution price.
But if we can get a rough estimate then that can provide a general area where it becomes a little less dangerous to short, though I'd still only use puts or some kind of options spread like a put backspread.