Investing in Sugar as a Commodity
Although sugar production began more than 9,000 years ago in southeastern Asia, today, Latin American countries dominate the sugar trade. Brazil is the largest sugar producer in the world, as you can see in the following table.
|Country||Production (Thousands of Tons)|
Source: United States Department of Agriculture, 2005 figures
If you’re interested in investing in sugar, head over to the New York Board of Trade (NYBOT), which offers two futures contracts that track the price of sugar: Sugar #11 (world production) and Sugar #14 (U.S. production). Here are the contract specs for these two sugar contracts:
|Sugar #11 (World)||Sugar #14 (U.S. production)|
|Contract size||112,000 pounds||112,000 pounds|
|Underlying commodity||Global sugar||Domestic (U.S.) sugar|
|($11.20 per contract)||($11.20 per contract)|
|Trading months||March, May, July, October||January, March, May, July, September, November|
Historically, Sugar #14 tends to be more expensive than Sugar #11. However, Sugar #11 accounts for most of the volume in the NYBOT sugar market.