Even though the sugar commodity is used around the world, its contract and price are determined in a few places. There the sugar quotes are decided, and based on them traders perform their trades.Unlike other instruments, sugar is not traded for days straight, but only from 8.30 until 17.59 GMT. The months in which its quotes are changed are March, may, July, October and December. Its exchange symbol is ICE US and on the MT4 platform it can be found under the symbol SUGAR#11.
Commodities such as sugar have historically had low correlations with stocks, bonds and other financial assets. Trading in sugar provides a way to diversify a portfolio and smooth out trading returns. Most commodity products, including sugar, are priced in US dollars and, therefore, are a way to bet on a weak US dollar. The CME contract trades globally on the CME Globex electronic trading platform and has expiration months of March, May, July and October.
Sugar is often traded using futures – contracts in which you agree to exchange a set amount of the underlying commodity at a set price on a set date. These contracts are traded on futures exchanges, such as the Intercontinental Exchange . The price of sugar is moved by several factors that affect supply and demand. Essentially, if more people want to buy sugar than sell it, the price will rise because it is more sought-after (the ‘demand’ outstrips the ‘supply’). On the other hand, if supply is greater than demand, the price will fall.
When you’re trading a futures contract via CFDs, like Sugar No.11, you’ll need to decide on the quantity of the commodity to buy or sell in advance of the expiry. Speculators buy or ‘go long’ on sugar futures when they believe that prices will go up, and they’ll sell or ‘go short’ on sugar futures when they think that prices will fall. As Brazil is the world’s largest sugar producer, the Brazilian Real is also an interesting currency to watch – usually as the USD/BRL pair.
Historically, Sugar reached an all time high of 65.20 in November of 1974. Sugar – data, forecasts, historical chart – was last updated on November of 2022. Experts see sugar and other soft commodities offering attractive trading opportunities in the coming years. The US economy has relied disproportionately on consumer and government borrowing and spending over the past few decades. To incentivize borrowing, the Fed has kept interest rates low for a long period of time.
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Your trading decision should be based on your analysis of the market and your trading strategy. After you have opened your position – attaching the appropriate stops and limits – it is important to monitor your position’s progress and to keep up to date with anything that could impact the price of sugar. CFD trading allows you to deal on changing prices of sugar futures and options, without buying or selling the contract. Both methods use leverage, which means you only have to put up a small margin to gain exposure to the full value of the trade. And, as you won’t ever take ownership of the underlying asset, you can go long or short on its price.
Sugar producers can employ a short hedge to lock in a selling price for the sugar they produce while businesses that require sugar can utilize a long hedge to secure a purchase price for the commodity they need. Meanwhile, the government introduced the concept of Minimum Selling Price of sugar in 2018 with a view to protect the interests of farmers and to ensure that the industry gets the minimum cost of production GO Markets Forex Broker Review of sugar. Remunerative and assured prices, along with improvements in yield and recovery, continue to attract Indian farmers to sugarcane cultivation despite the ample supply and the low prices of sugar in the market. As sugar is a common ingredient in food and ethanol production it’s a highly liquid commodity market. The vast number of traders bidding on the market price can cause lots of volatility.
Americans consume as much as 77.1 pounds of sugar and related sweeteners per person per year, according to United States Department of Agriculture data. That’s nearly twice the limit the department recommends, based on a 2,000-calorie diet. TGE Raw Sugar futures prices are quoted in yen per metric ton and are traded in lot sizes of 50 tonnes . Euronext White Sugar (No. 407) futures are traded in units of 50 tonnes and contract prices are quoted in dollars and cents per metric ton.
Insight and analysis from FAS’s overseas offices on issues affecting agricultural production and trade. Sugar as a product dates back as far as fourth century India and was once so rare it was referred to as “white gold”. Sugar cane, which was the first source of sugar, is a perennial grass that is grown in tropical and subtropical areas. For example, in 2018, the UK government introduced a tax on the producers of soft drinks which contained sugar above a certain threshold. Global consumption of sugar has shown signs of waning in recent years due to a variety of reasons, public health among them.
Because growers are subsidised, supply increases drastically, which causes lower prices. Sugar is priced in US dollars , therefore any ups and downs in the currency will affect its international price. A weak dollar generally means that commodity prices drop, Wealth by Virtue: Rise Above the Maze… BY CHAD GORDON and the demand increases. If the dollar strengthens against other currencies, sugar becomes more expensive and demand decreases. And, because Brazil is the largest sugar producer in the world, fluctuations in the Brazilian real (R$) also affect the price.
Local producers will sell their goods in the domestic currency of the world’s largest sugar producer. Supply and demand are, as usual, important to the process of determining the price of sugar. However, as mentioned, sugar is used by almost everyone so more people have access and effect the price. He believes that small changes in weather patterns could be the catalyst for a supply disruption and a rise in prices. Traders looking to speculate on short-term bottlenecks in supply might see sugar as an attractive trade.
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When the US dollar is weak, it costs less to buy sugar in other global currencies, and a larger amount when USD is high. Therefore, poor conditions such as drought, frost and insufficient rainfall can reduce its supply. If demand for sugar outweighs the supply, it can lead to a run on sugar and push the price up.
In December 2014 both governments agreed to export limits and reference prices for Mexican sugar. For FY 2020, the U.S. allocated a quota of 152,691 tons of raw cane sugar to Brazil which will pay an import duty not to exceed US$ 1.375 cents per kilogram. The amount set aside for import under TRQs must meet US obligations to the World Trade Organization – currently a minimum of 1,117,195 tons of raw sugar and 22,000 tons of refined sugar.
Sometimes black cane workers resisted collectively by striking during planting and harvesting time — threatening to ruin the crop. The landscape bears witness and corroborates Whitney’s version of history. Sugar cane grows on farms all around the jail, but at the nearby Louisiana State Penitentiary, or Angola, prisoners grow it. Angola is the largest maximum-security prison by land mass in the nation.
- Since the preliminary investigations found that imported Mexican sugar hurt the U.S. domestic industry, duties would have to be charged against the imported product.
- Sugar has been linked in the United States to diabetes, obesity and cancer.
- 74% of retail client accounts lose money when trading CFDs, with this investment provider.
- In December 2014 both governments agreed to export limits and reference prices for Mexican sugar.
- From the earliest traces of cane domestication on the Pacific island of New Guinea 10,000 years ago to its island-hopping advance to ancient India in 350 B.C., sugar was locally consumed and very labor-intensive.
The quality that is acceptable for delivery is raw centrifugal cane sugar based on 96 degrees average polarization. This just means the sugar has been processed through a centrifuge in a certain way. Traders could purchase shares of India’s largest sugar producer Bajaj Hindusthan Ltd on the Bombay Stock Exchange or derivatives through a broker available in your country. On the NYSE traders interested in sugar might want to look into companies like HSY, CSAN and TR. Tariffs that are in place to look after farmers and producers sometimes cause producers to make much more sugar than is needed in the market.
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There are more than 700 installed sugar factories in the countries with a crushing capacity of about 34 million tonnes and an annual output of about US$11 Billion. Today, 412,054 tons of Brazilian sugar can be imported at a preferential rate of €98 per ton and an erga omnes TRQ of 289,977 tons is also available at the same duty rate. In addition, a temporary duty-free quota of 400,000 tons annually is open for industrial sugar imports. As these are ‘futures’ contracts, there will be contracts available to trade with different months & years. Many traders will choose to trade the most active month, also known as the “front” month, as this will typically be the contract with the most trading volume. 74% of retail investor accounts lose money when trading CFDs with this provider.
Investing in a Sugar No. 11 futures contract is one way for producers, processors, and speculators to trade sugar futures. A futures contract is a method of buying or selling commodities at a preset price and standardized delivery dates. Investors can sell or buy depending on their view of the direction of the price of the commodity. Sugar prices Wednesday erased an early rally and closed slightly lower. A drop of more than -1% in crude oil prices Wednesday sparked long liquidation in sugar futures. Lower crude prices undercut ethanol prices and may prompt Brazil’s sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
The offers that appear in this table are from partnerships from which Investopedia receives compensation. Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. Position Limit”Position Limit and Position Accountability information for all IFUS products can be found here. The United States Department of Agriculture notes lower supplies in China and Mexico could offset record production in the near future.
Lewis is the minority adviser for the federal Farm Service Agency (F.S.A.) in St. Martin and Lafayette Parish, and also participates in lobbying federal legislators. If things don’t change, Lewis told me, “I’m probably one of two or three that’s going to be farming in the next 10 to 15 years. By World War II, many black people began to move not simply from one plantation to another, but from a cane field to a car factory in the North. By then, harvesting machines had begun to take over some, but not all, of the work. Louisiana led the nation in destroying the lives of black people in the name of economic efficiency.
Trading in futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority. ZuluTrade Review Sugar crops, much like coffee and cocoa crops, require plenty of sunshine and rainfall. Naturally, poor weather conditions have a troublesome effect on sugar supply. Receive information about sales, new products, and what is happening at TKB.