Sugar Trading, a sweet investment

Thinking of financial markets, sugar trading is probably not the first commodity that comes to mind. Yet the sugar market actually offers an amazing potential for profit and here, you are going to learn the basics of the sugar market.

What should I know about the sugar trading market?

The ‘sugar market’ comprises of edible carbohydrates - i.e. fructose, lactose, and sucrose. Mild climates like the UK grow sugar beet as a root product, while tropical climates are good for sugar cane. Afterwards, they are processed into end products. Sugar commodities are traded with their own ticker and symbol like many other commodities.

Why should I choose sugar trading?

Considering that the Sugar market sees a constant steady growth, sugar trading is essential for a diversified portfolio. Although some fluctuations in the market are present, as it is with all commodities, demand for sugar is fairly high and it’s expected to grow steadily over time. And considering the market that demands junk food, sugary drinks, and chocolate on a regular basis, it is likely to expand even more in the future.

What influences the price of sugar commodities?

The forces of supply and demand influence all commodities and the sugar ones are not an exception. A sugar crop may be poor in one year and prosperous in another depending on weather and disease. Supply might be influenced also by climate, natural disasters, soil quality, drought conditions, and insect patterns.

Sugar has some industrial uses, to wit the growing production of ethanol. However, the largest market for sugar products is the edible food arena and keeping track of developments in the food industry in large consumer countries like the US can be an effective way to plot the market.

An interesting arena for sugar trading is ethanol /Brazil is currently the largest producer of ethanol/. There is a strong focus on this product as a potential alternative to fossil fuels (ethanol is fully sustainable). If you are looking to speculate on the ‘green’ markets, this may interest you.

Sugar trading has interesting futures options. It is also an interesting trading commodity. There is even an ETF tracker for sugar. With the rise of sustainable fuels and the uses of sugar in food, it is an industry that is set to remain in steady growth over time. That is why including sugar commodities in your portfolio might be a great idea.