|Instrument:Sugar no. 11|
|Trading Hours (GMT):08:30-17:59|
Even though the sugar commodity is used around the world, its contract and price are determined in a few places. The sugar commodity is traded in the International Exchange (ICE), Kansai Commodities trading Exchange (KEX), Brazilian Mercantile and Futures Exchange (BF&M), National Commodities and Derivatives Exchange (NCDEX), National Commodity Exchange Limited (NCEL), Zhengzou Commodity Exchange (CZCE) And the Multi Commodity Exchange (MCX). There the sugar quotes are decided, and based on them traders perform their trades.
Unlike other instruments, sugar is not traded for days straight, but only from 8.30 until 17.59 GMT. The months in which its quotes are changed are March, may, July, October and December. Its exchange symbol is ICE US and on the MT5 platform it can be found under the symbol SUGAR#11.
What Influences the Price of Sugar
Unlike other commodities which are only used by individuals and specific industries, sugar is consumed all over the world and by most of the population. This has a major impact on the price of sugar:
- Supply and demand are, as usual, important to the process of determining the price of sugar. However, as mentioned, sugar is used by almost everyone so more people have access and effect the price.
- As a derivative of the previous factor, many bodies fight the usage of sugar – as it is a cause of diabetes, obesity, teeth related issues and more. Countries want to narrow sugar induced health problems can change their policy regarding sugar, which can bring about a massive change in its demand rate.
- A large portion of the sugar comes from Europe. As a matter of fact, Europe is the second largest sugar exporter in the world. Should import and export rates change, it could affect the supply numbers which could lead to a massive change in sugar price.
- Today people are more and more aware to the dangers of sugar, and look for alternatives such as corn syrup and others. This could lead to an fluctuations of sugar prices and more people looking for a new sweetener for their food and drinks.
In order to understand sugar trading better, an example is in order. Say the price is $23.38 for each lbs., and the minimal position size must be of one hundred units, bringing it to $2,338 total. However, as it is traded as a CFD leverage can be employed – $1 of the trader’s account for every $33 of the position’s value. That means the trader will need to invest $70.84 of his account. Should the sugar price go up – the trader can benefit, and if it goes down – his investment failed.
Sugar CFD’s Trading
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Sugar Trading Main FAQs
- What influences the price of sugar?
Naturally supply and demand are the most important determinates of sugar’s price, but what influences the supply and demand of sugar? Demand for sugar around the world from consumers has been dropping as health concerns cause consumers to look for alternatives to the sugar that can cause a host of health problems. Offsetting that has been increased demand for biofuels, with some countries using sugar cane as an input for ethanol. This demand can also be influenced by the price of oil. When oil prices drop it is no longer competitive to produce ethanol using sugar cane, and the price of sugar is likely to fall. Of course weather can also impact sugar prices, especially in Brazil and India, where roughly half the world’s sugar cane crops are grown.
- Why should I trade sugar?
Sugar is an interesting commodity, and because there are so many uses for it the price of sugar can become quite volatile. This is especially true whenever there is a disruption in supply from any of the major sugar cane producing countries. Monsoon season in India is likely to cause a spike in sugar prices when it is particularly bad. Higher oil prices might cause sugar prices to rise as Brazil’s sugar cane farmers change over to ethanol production rather than sugar. The smart trader can see these changes unfolding and trade sugar for their own gain.
- What is the best sugar trading strategy?
The best strategy to use when trading sugar is going to depend on whether the market is trending, or if it is range-bound. In a trending market the various oscillators are often best at locating potential zones where pullbacks could occur, and areas where a trend could either continue or reverse. When the market is range-bound it is usually best to locate the areas of support and resistance and trade based off of moves from those levels. That type of strategy can also reveal the beginning of a new trend when price breaks through support or resistance rather than bouncing.