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Sugar Futures Trading

Sugar Trading Defined and Explained

Sugar is traded and used worldwide. #11 Sugar refers to World raw sugar. Raw sugar is any crystallized sugar product from a cane sugar production facility delivered in bulk.

Sugar is produced in over 120 countries and consumed in every country.  Sugar is used in everything from food to industrial applications.

According to the New York Board of Trade, they are the “designated futures market and exclusive global marketplace for Sugar No. 11sm futures and options on futures contracts”.  The world sugar futures market is NYBOT’s largest trading market and has been in existence since 1914.

Sugar Market Investing

Investing in sugar makes sense, but sugar traders must realize that physical sugar pricing is often done in relation to the futures or terminal markets for both raw and white sugar.  The price of a commodity usually moves for some reason, and the smart commodities trader must be familiar with past trends and have an eye out for new ones, along with potential glitches, fundamental changes, and anything else that might affect the price of sugar.

Sugar Trading Prices/Rates

The Contract Size for raw sugar is 112,000 pounds (50 tons).  The Minimum Price Movement is 1/100 cent/lb., or the equivalent to $11.20 per contract.

Sugar traders must be aware of the tariffs involved in international trading and how orders or shipments from one country to the next may affect pricing swings.

Sugar Trading

Strong growth in the Sugar No. 11 futures makes the market attractive and many trading experts view sugar as an under-rated commodity.  As sugar is so prevalent in all countries trading, there is a fair among of standardization and a set of international rules that are typically followed.

Most trading houses seek contracts conducted under either the Sugar Association of London or the Refined Sugar Association contract rules.  Also, many traders are seeking to make it a requirement that their trading partner is also a member of the relevant sugar association. An important feature of the rules and contract conditions is the settlement of disputes by commercial international arbitration.  This comes into play on the international sugar market when shipping problems come into play.

Sugar Trading Strategy

The last ten years have seen an unprecedented period of stability with the volatility index for sugar at an average of 4-10%.  As the sugar market continues to spread to additional international traders, instead of one single one, the market will stabilize and spread risk.

Technical sugar traders beat the broad averages by watching for blips in the norm. Their analysis gives them price levels at which to enter and exit the market.

Sugar traders can a plan by looking at price charts on sugar – specifically the monthly, weekly, and then daily charts. This helps give an indication where sugar prices have been, find key support and resistance levels, and where potential prices might go.

Sugar Trading Software

Having the right tool for the job is critical. Trading software can be used to augment existing sugar trading approaches by giving one a broadened perspective. The key to a sugar trading system is its ability to forecast moving averages! One of the better software products is VantagePoint trading software that helps you to “see” what is likely to happen in the sugar market that you are trading before other traders (using only single-market analysis) catch wind of it. Frequently the crossover indicator flashes an “early warning” that the market is likely to make a top or bottom - before it actually happens!

Sugar Major Indicators and indices

The Contract Months for sugar are March, May, July, and October.  The Last Trading Day is the last business day of the month preceding delivery month.

Sugar Trading News

  • The USDA provides production and price information for the Sugar Trading market.
  • The Sugar Traders Association of the United Kingdom (STAUK) was founded in 1952 by sugar trading companies based in London.  They provide information, sugar news and analysis of trends for the sugar market.
  • The Sugar Information Service produces the website OnlineSugars.com.  They provide history and analysis of the international sugar trade.
  • Sugar Research Institute - Australia’s premier sugar processing research and development conducts client research and produces many Australian sugar industry reports.

Sugar Trading Information

The NYBOT specifies The sugar deliverable under Sugar No. 11 Futures Contracts are as follows:

Growths of Argentina, Australia, Barbados, Belize, Brazil, Honduras, Colombia, Costa

Rica, Dominican Republic, El Salvador, Ecuador, Fiji Islands, French Antilles, Guatemala,

India, Jamaica, Malawi, Mauritius, Mexico, Mozambique, Nicaragua, Peru, Republic of the

Philippines, South Africa, Swaziland, Taiwan, Thailand, Trinidad, United States and

Zimbabwe.

The value of physical sugar is also influenced by its location. If a large buyer such entered the market to buy, potential sellers to that country would look for sugar located as close as possible to the destination in order to save on shipping costs.

Similarly, in the case of raw sugar, normally the Far East region is well-supplied with raw sugar from Thailand, Australia and South Africa. But sometimes, with unexpectedly large crop failures, there could suddenly be a shortage of sugar from one of these origins, making shipping from another region economically feasible.

Sugar Trading Advice

Sugar traders must continually assess whether raw sugar of a particular origin is in short or in plentiful supply.

The problem for buyers and sellers of physical sugar is that although they can 'hedge' their cargoes of sugar on the futures market, they cannot hedge the premium or discount element in the price, such as tariffs or changes in shipping.

Other factors apart from supply also have a bearing on the level of the premium or discount for trading sugar. The quality of the sugar may also be reflected in its value although there have been some occasions when strong demand for a lower quality has distorted this.

Sugar Trading History

Sugar cane made its entry early to the New World early. Columbus himself introduced the crop to Hispaniola on his second voyage in 1493. The first record of a substantial quantity of sugar was of three ships arriving in Spain loaded with sugar in 1525. By 1530, 12 ships arrived carrying 1,500 tons of sugar. The sugar trade exploded and by 1546, there were a total of 24 sugar mills on the island.

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* VantagePoint's accuracy statistics were computed on out-of-sample price data utilizing neural networks trained on both single market and intermarket data and relate to the Neural Index which indicates whether the average of tomorrow’s typical price and the typical price of the day after tomorrow (both unknowns at this time) are expected to be higher or lower than the average of yesterday's typical price and the typical price of the day before yesterday.  The numerical value of the Neural Index, either a one (1) or a zero (0) thereby indicates whether or not the trend direction is expected to be higher or lower for each target market over the next two days. A Neural Network accuracy statistic of 80% does not mean that eight out of ten trades will be winning trades. VantagePoint is not a trading system that gives the same specific buy and sell signals to all users. It is a technical forecasting tool that is comprised of proprietary forecasting indicators that apply neural networks to market data for the purpose of finding patterns and relationships between markets and then using this information to make futuristic forecasts. Using these indicators each trader determines his or her own entries, exits and stop placements which may vary from those of other traders due to differences among traders in trading style, objectives, risk propensity, account size and number of contracts involved, thereby producing different trading results from one trader to another. Futures and options trading involves risk, is not for every trader, and only risk capital should be used. For more detailed information, please read our Important Disclaimer, Privacy Policy, and Software License Agreement.


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