Sugar Stocks Defy the Trend, Edging Higher amid Plummet of Global Benchmark


Sugar stocks continued to edge higher after the raw sugar price hit a 4-year high at 18.93 cents per pound in late February. Buriram Sugar Public Company Limited (BRR) seems to be the most profitable from the soaring sugar price as the share price surged more than 105% this year and 67% since February 22, 2021, the day sugar price rose to a 4-year high.

 

Other sugar producers and distributors also enjoyed the gain as well, but at a lower level. Kaset Thai International Sugar Corporation Public Company Limited (KTIS) rose 40.28% YTD and 4.52% since February 22.

Khonburi Sugar Public Company Limited (KBS) rose 13.61% YTD and 10.46% since February.

Khon Kaen Sugar Industry Public Company Limited (KSL) rose 48.70% YTD and 1.21% since February.

 

While sugar stocks are enjoying the “4-year high,” the price made a sharp plunge to 15.63 cents per pound, the same level as late last year. Currently, the sugar price is 17% down from its previous high.

The 50 days moving average of sugar price is 16.38 cents per pound, while the 100 days moving average is at 15.64 cents and the 200 days moving average is at 14.16 cents.

 

Does this mean the share prices are starting to move in an irrelevant trend of the sugar benchmark?

 

At the closing of March 25, 2021, the Relative Strength Index (RSI) of BRR indicates an overbought level of 90.71, while the RSI of KTIS, KBS and KSL are 57.84, 65.49 and 59.73, respectively.

 

The share price of KTIS, KBS and KSL were up and down in the past week, although the gain outpaced the loss. Meanwhile, the share price of BRR has been closing higher for 10 days straight, resulting in a gain of 77.77%.

The source of this hike may be something other than the used-to-be rising sugar price.

 

Mr. Anant Tangtongwechakit, Chief Executive Officer of BRR, gave a hint on his last comment when talking about the company’s outlook in 2021. He stated that the company has entered a feasibility study to enter the business in cannabis and hemp, while looking for investment from upstream to downstream to synergize with the company’s profession.

However, the trend of announcing a feasibility study on the cannabis and hemp business is starting to die down. Could there be other factors that are driving the share price?

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