Sugar Futures

Market

Sugar futures are a highly valued commodity futures product. The appeal of sugar futures as an investment stems from its wide use throughout the globe. As such a popular commodity futures product, investors can use sugar futures to make plays against strong or weak economies, as well as weather conditions and government policies around the world.

History

Sugar futures began trading in the United States in 1914 on the coffee, sugar and cocoa exchange in New York and the New York Board of Trade. Options on sugar futures were introduced in 1982.

Sugar as a product dates back as far as fourth century India and was once so rare it was referred to as “white gold”. Sugar cane, which was the first source of sugar, is a perennial grass that is grown in tropical and subtropical areas. Eventually, beets were discovered as a source of sugar.

Today, sugar can be found throughout the world, with more than 120 countries producing it for domestic and international use.

Facts

The two sugar futures markets that are traded include world sugar No.11 and U.S. sugar no. 16. While Sugar no. 11 is the most commonly-traded international commodities futures product, Sugar no. 16 futures prices are often higher. The discrepancy in prices is due to subsidies and a tariff program that supports U.S. sugar farmers.

Around 160 million metric tons of sugar is produced every year, with the largest producers being Brazil, India and the European Union. The primary driver of sugar prices is government regulation. Many governments heavily subsidize their sugar manufacturers to "dump" cheaply priced sugar in the market.

Currently, 69 percent of the world's sugar is consumed in its country of origin, while the rest is traded on international markets.

Trading

  • Sugar futures are traded at the InterContinental Exchange (ICE) in contract months January, March, May, July and October.
  • Sugar futures are traded under the name sugar no. 11, with prices quoted in U.S. dollars per pound, and a minimum fluctuation of $0.0001 per pound.
  • Sugar no. 11 is the main commodity futures contract traded, while sugar no. 16 is used for the delivery of cane sugar of U.S. or duty-free origin, delivered in bulk to New York, Baltimore, Galveston, New Orleans or Savannah.
  • One sugar futures contract represents 112,000 pounds of raw cane sugar.
  • Sugar is a major source for ethanol production and therefore, crude oil futures prices and the demand for ethanol impact the international price of sugar futures.

You can learn more about Soft futures by downloading our guide, Free Fundamentals of Trading Soft Futures.

 

Contract Specifications  

Contract SymbolContract UnitPrice Quotation
ISB112,000 lbscents per pound
Trading ExchangeTrading HoursTick Value
ICE3:30 - 13:00 (NY)$0.01/lb = $11.20

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.