Learn about Sugar Commodity Trading, Follow Sugar Commodity Markets
With global agricultural prices looking set for long term increases, sugar commodity trading offers the trader or investor keen for exposure to commodities as an asset class some great opportunities. Just consider in 1974 sugar prices spiked over 60 cents a pound and in 1981 by over 40 cents a pound as the 1970's commodity bull market ended. And in 2009 commodities in general and sugar commodity prices in particular are advancing strongly again. The serious 2008 world economic slowdown is now giving way to strong recovering markets and sugar commodity prices are at their highest for 28 years.
There are numerous cases of serious sugar shortages as desperate consumers across Asia queue for small quantities of this key commodity. To think that while in 2007 India was a major exporter of sugar, with a surplus of five million tons, but from 2009 the country is a net importer. So what has caused this serious imbalance between world sugar demand and supply? After the shock of the global economic crisis, the US dollar is falling against other currencies and hopes of a strong rebound are causing real asset prices to be driven higher. Add in the weak monsoon season in India and very unhelpful weather for sugar plantations in Brazil, impacting adversely on sugar yields, and the result is raw sugar prices heading for a high of 25 cents a pound.
Firstly, as you embark on your sugar commodity trading journey, discover where sugar comes from, and see how a recent development in alternative fuels poses a challenge to global sugar commodity markets in future. With sugar produced in over 100 countries, largely from the tropical and sub-tropical areas of the southern hemisphere, around 75-80% comes from sugarcane. A key factor for successful crop yields is plentiful rainfall, and the annual optimum is around 600 mm. Sugar prices on world commodity exchanges can also be driven higher by crop infestation as a result of attacks by pests.
Leading the pack of top producing nations is Brazil, also the largest global exporter, followed by India, China, the EU, USA and Australia. A major distorting factor in world sugar markets is subsidy regimes in the US and Europe, as they artificially drive prices higher than the world sugar price. In addition to its traditional uses in bread fermentation and in fruit and vegetable products, sugar is now increasingly used as a source of ethanol fuel.
Moving on from 2007 when there was already very little room between supply and demand, the situation will almost certainly deteriorate with an expected demand surge in emerging BRIC nations particularly China and India. In fact India as the largest consumer in the world is now using significantly more sugar for ethanol as an alternative fuel. Meanwhile, starting from a very low base of 7kg annual per capita consumption is China, and as the world's third largest consumer and producer, is still some way behind the annual USA per capita demand of 45kg.
You will help your sugar commodity trading strategy by getting to know about the Brazilian market, the largest world producer. This country's strategy is to avoid a sugar glut by taking any surplus sugarcane crop to produce ethanol for biodiesel for export and domestic consumption. More sugar is being channelled for ethanol as crude oil prices rise, along with sugar demand surges in China. There are major challenges for sugar producers going forward, given the likely high crude oil prices in future coupled with growing demand, seeing sugar prices remaining high.
With your chosen commodity trading system and advice from your professional financial adviser, you can trade from almost anywhere in the world with good internet access. #11 Raw sugar futures is the most heavily traded sugar futures contract in the world, available on the ICE US Futures platform as is the #16 Sugar futures contract. Alternatively, you can trade raw sugar futures on LIFFE CONNECT, the trading platform of LIFFE, part of the NYSE Euronext Group. Also look at soft commodity indexes using an ETF which may not involve taking a leveraged position. With the growth in bio ethanol demand and sugar consumption in the BRIC economies, prospects for sugar prices and sugar commodity trading look very exciting in the years ahead. - 23217
There are numerous cases of serious sugar shortages as desperate consumers across Asia queue for small quantities of this key commodity. To think that while in 2007 India was a major exporter of sugar, with a surplus of five million tons, but from 2009 the country is a net importer. So what has caused this serious imbalance between world sugar demand and supply? After the shock of the global economic crisis, the US dollar is falling against other currencies and hopes of a strong rebound are causing real asset prices to be driven higher. Add in the weak monsoon season in India and very unhelpful weather for sugar plantations in Brazil, impacting adversely on sugar yields, and the result is raw sugar prices heading for a high of 25 cents a pound.
Firstly, as you embark on your sugar commodity trading journey, discover where sugar comes from, and see how a recent development in alternative fuels poses a challenge to global sugar commodity markets in future. With sugar produced in over 100 countries, largely from the tropical and sub-tropical areas of the southern hemisphere, around 75-80% comes from sugarcane. A key factor for successful crop yields is plentiful rainfall, and the annual optimum is around 600 mm. Sugar prices on world commodity exchanges can also be driven higher by crop infestation as a result of attacks by pests.
Leading the pack of top producing nations is Brazil, also the largest global exporter, followed by India, China, the EU, USA and Australia. A major distorting factor in world sugar markets is subsidy regimes in the US and Europe, as they artificially drive prices higher than the world sugar price. In addition to its traditional uses in bread fermentation and in fruit and vegetable products, sugar is now increasingly used as a source of ethanol fuel.
Moving on from 2007 when there was already very little room between supply and demand, the situation will almost certainly deteriorate with an expected demand surge in emerging BRIC nations particularly China and India. In fact India as the largest consumer in the world is now using significantly more sugar for ethanol as an alternative fuel. Meanwhile, starting from a very low base of 7kg annual per capita consumption is China, and as the world's third largest consumer and producer, is still some way behind the annual USA per capita demand of 45kg.
You will help your sugar commodity trading strategy by getting to know about the Brazilian market, the largest world producer. This country's strategy is to avoid a sugar glut by taking any surplus sugarcane crop to produce ethanol for biodiesel for export and domestic consumption. More sugar is being channelled for ethanol as crude oil prices rise, along with sugar demand surges in China. There are major challenges for sugar producers going forward, given the likely high crude oil prices in future coupled with growing demand, seeing sugar prices remaining high.
With your chosen commodity trading system and advice from your professional financial adviser, you can trade from almost anywhere in the world with good internet access. #11 Raw sugar futures is the most heavily traded sugar futures contract in the world, available on the ICE US Futures platform as is the #16 Sugar futures contract. Alternatively, you can trade raw sugar futures on LIFFE CONNECT, the trading platform of LIFFE, part of the NYSE Euronext Group. Also look at soft commodity indexes using an ETF which may not involve taking a leveraged position. With the growth in bio ethanol demand and sugar consumption in the BRIC economies, prospects for sugar prices and sugar commodity trading look very exciting in the years ahead. - 23217
About the Author:
Covering soft commodities, the author, Marianna Gomes, writes articles for the Commodity Trading Today website, a helpful online resource. Discover more about how you could benefit from sugar commodity trading suggestions here.
posted by X - Men @ 12:11 AM
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