Sugar Trading, a sweet investment
When you consider financial markets, sugar trading is usually not the first commodity that comes to mind. However, the sugar market actually offers an enormous potential for profit. In this guide you will learn the basics of the sugar market.
What should you know about the sugar trading market?
The ‘sugar market’ includes fructose, lactose and sucrose, i.e. edible carbohydrates. Sugar beet is the root product from mild climates like the UK, while sugar cane comes from tropical climates. These juices are then processed into the end products. Sugar commodities are traded just like most other commodities, with their own ticker and symbol.
Why should you choose sugar trading?
The Sugar market sees a constant steady growth and sugar trading is a must for a diversified portfolio. While there is some fluctuation in the market, as with all commodities, demand for sugar is comparatively high and is expected to keep growing steadily over time. In a market that demands junk food, sugary drinks and chocolate on a regular basis, it will probably expand even more over time.
What influences the price of sugar commodities?
The forces of supply and demand influence all commodities. Weather and disease are the primary reasons that a sugar crop may be poor in one year and rich in another. Climate changes, natural phenomena, soil quality, drought conditions and insect patterns will all have their impact on supply.
Sugar has some industrial uses, in particular the growing production of ethanol, but the largest market for sugar products are the edible foods. Following the developments in food industry in large consumer countries like the US can be an effective way to plot the market.
Ethanol is an interesting opportunity for sugar trading. Brazil is currently the largest producer of ethanol, and there is a huge focus on this product as a potential alternative to fossil fuels (ethanol is completely sustainable). If you are willing to speculate on the ‘green’ markets, this could be the focus for you.
Sugar trading has interesting futures options and can make an interesting trading commodity in itself. There is even an ETF tracker for sugar. With the advent of sustainable fuels and its uses in food, sugar trading is an industry that is expected to remain in steady growth over time. This is why we think that including sugar commodities in your portfolio is a great idea.