Sugar trading: Sugar & Commodities Trading

For traders, the disadvantage of trading futures includes an expectation that the physical commodity will be delivered – which they don’t want. Therefore, it’s necessary to ensure rollover arrangements are in place. You can trade sugar using a wide range of financial instruments, including futures, CFDs.

Increased government subsidies of sugar could produce an oversupply that dwarfs demand. Most commodity products, including sugar, are priced in US dollars and, therefore, are a way to bet on a weak US dollar. Our emphasis on building long-term relationships means we will always focus on what’s right. By partnering with us, you gain access to a wide global network of market participants. We act as a platform for managing risk, improving market access, and increasing productivity through tailored strategies. Today people are more and more aware to the dangers of sugar, and look for alternatives such as corn syrup and others.

A significant amount of sugar is also produced in India, European Union, China, Thailand and the United States. The sugar prices displayed in Trading Economics are based on over-the-counter and contract for difference financial instruments. You should consider whether you can afford to take the high risk of losing your money. Regarding the production of soft commodities, weather plays a significant role. A warm climate can be “too warm” for sugar and can lead to a decrease in sugar supply and an increase in prices. For example, a drought in Brazil damaged sugar cane which affected the pace of sugar production.

Higher oil prices might cause sugar prices to rise as Brazil’s sugar cane farmers change over to ethanol production rather than sugar. The smart trader can see these changes unfolding and trade sugar for their own gain. Naturally supply and demand are the most important determinates of sugar’s price, but what influences the supply and demand of sugar? Offsetting that has been increased demand for biofuels, with some countries using sugar cane as an input for ethanol. When oil prices drop it is no longer competitive to produce ethanol using sugar cane, and the price of sugar is likely to fall.

Trading platforms

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 . 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. 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.

Sugar – data, forecasts, historical chart – was last updated on April of 2023. You currently don’t have access to this book, however you can purchase separate chapters directly from the table of contents or buy the full version. We’re sorry, but the service you are attempting to access may not be intended for your country of residence.

Even though the sugar commodity is used around the world, its contract and price are determined in a few places. 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. Sugar cane is cultivated in countries with warmer climates like India, Brazil, Thailand, China, and Mexico. When trading commodities, you should gain insight into the locations where the production takes place.

Fundamental trading strategy

This could lead to an fluctuations of sugar prices and more people looking for a new sweetener for their food and drinks. As a matter of fact, Europe is the second largest sugar exporter in the world. Should import and export rates change, it could affect the supply numbers which could lead to a massive change in sugar price. Insight and analysis from FAS’s overseas offices on issues affecting agricultural production and trade. A trading budget allows you to exercise your strategy needs, without facing extreme losses. Even if you’re great at trading, you should not put more than 10% of your portfolio in one trade.

Commodity.com is not liable for any damages arising out of the use of its contents. When evaluating online brokers, always consult the broker’s website. Commodity.com makes no warranty that its content will be accurate, timely, useful, or reliable. Mike Ciccarelli, a commodity and stock trader at Briefing.com agrees.

Crude Oil Prices

When the US dollar is weak, it costs less to buy sugar in other global currencies, and a larger amount when USD is high. The information in this site does not contain investment advice or an investment recommendation, or an offer of or solicitation for transaction in any financial instrument. Shawn Hackett, President of Hackett Financial Advisors, believes that demand for sugar is strong and that the futures market suggests a rally might be coming soon. 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. Traders looking to speculate on short-term bottlenecks in supply might see sugar as an attractive trade.

An option bet succeeds only if the sugar futures rise above the strike price. The futures should be greater than the amount paid for the contract. Options traders must be right about the size and timing of the move in sugar futures to profit from their trades. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. Since its launch, Sugar Trading Manual has established itself as the definitive information source for the sugar market worldwide. It is compiled from contributions by some of the most senior and widely respected figures in the international sugar trade.

Global consumption of sugar has shown signs of waning in recent years due to a variety of reasons, public health among them. Governments in developed countries have been actively trying to change consumer behaviour when it comes to sugar. Is quoted in USD, which means there is normally an inverse relationship between the dollar and the price of sugar.

As consumers in these countries accumulate more purchasing power, their appetite for sweet foods may grow as well. Trading in sugar might be a way to capitalize on these global trends. There are virtually no pure-play global public companies engaged in the production and sale of sugar. Imperial Sugar was a public company before being acquired and taken private in 2012.

Sugar Trading Main FAQs

The United States Department of Agriculture notes lower supplies in China and Mexico could offset record production in the near future. 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. API GATEWAY Direct access to our data from your apps using any programing language.

To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”. 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. Local producers will sell their goods in the domestic currency of the world’s largest sugar producer. Experts see sugar and other soft commodities offering attractive trading opportunities in the coming years.