A ONE-STOP PORTAL OF INFORMATION FOR FUTURES AND COMMODITIES TRADERS




Ticker: SB or SU
Exchange: NYBOT
Trading Hours:9:00 am to 12:00 pm (EST)
Contract Size: 112,000 lbs.
Contract Months:Jan, Mar, May, Jul, Oct
Price Quote: Cents per pound
Tick Size: 1/100 cent/lb., equivalent to $11.20 per contract
First Notice Day: First business day after the last trading day.
Last Trading Day: Last business day of the month preceding delivery month
Daily Price Limit:None


40 Yr Seasonal Chart Long-Term Chart Productions Maps
Supply & Demand Tables Supply & Demand Est. Prospective Plantings

Fundamental Overview:

What is it?

Sugar, or sucrose, is produced from both sugarcane and sugar beets. Although the growing regions, maturity duration and processing techniques are different for the two, they both produce refined sugars that are indistinguishable from each other.

Sugar cane is a tall bamboo-like tropical grass which matures in about 12 to 24 months. Its shoots can reach 12 feet in height and requires a moist and tropical climate. Sugar cane accounts for about 64% of world production.

Sugar beets are roots that grow about a foot long and weigh about 2 pounds at maturity. Sugar beets grow in temperate climates and are a bit sturdier.

What are its uses?

Refined sugar is used almost exclusively for human consumption. Bakers, soft-drink makers, confectioners, and the consumer are its major users. A very small amount is also used in some tobacco products and pharmaceuticals.

Where is it produced?

Sugar cane is grown mainly Brazil, India, and Cuba. The US also grows sugar cane in Florida, Louisiana, Texas, and Hawaii. The largest producers of sugar beets are Russia, France, Mexico, Germany, Poland and the US. In the US, sugar is grown mainly in California, Minnesota and the Dakotas.

The processing of sugar beets and sugar cane is a complicated and very expensive procedure. The main steps are extraction, purification, evaporation, crystallization and centrifuging. The "raw" sugar is then further refined for sale to the end users in the food industry or to brokers who locate buyers for the sugar. It may also be sold to the US government according to price protection programs.

What determines market price?

Overall, a significant portion of the world's sugar is insulated from the free market by price protection programs of the US, Europe and other countries. A large share of the world trade in sugar is a result of bilateral and multilateral agreements.

Because the demand for sugar is, at least in the short run, relatively price-inelastic, changes in supply can significantly affect prices. Weather is an important determinant of supply, especially when it comes to sugarcane. Sugarcane has a short window of time when it must be harvested. Any unusual amount of rain or some other delay in the harvesting can cause the cane to start to lose some of its sugar yield. Another problem that faces all crops, but particularly sugar, is disease from insects. Sugar is just as sweet to insects as it is to humans and therefore can attract more than 40 different insect pests.

The majority of sugar futures are traded on the NYBOT. The contract is for 112,000 pounds of sugar with delivery months of March, May, July, and October. The price is quoted in cents per pound with a minimum price fluctuation of .01 cents.

Notes

Although seasonal trends in sugar are weak, the demand for sugar tends to be highest in the summer months when soft-drink consumption is at its highest. Over the past several years, however, the competition from H.F.C.S (High Fructose Corn Syrup) in soft-drinks may make this seasonal trend even weaker.

One trap a new trader should try to avoid is overreacting to headline news about sugar crops. Most headlines involve hurricanes or tropical storms that may only affect sugarcane-producing regions. It is important to remember that both sugarcane and sugar beets produce the same sugar, and sugar beet growing regions are not as susceptible to such disasters.






Copyright 2004 FuturesBuzz.com. All rights reserved.
Disclaimer