Investing in Sugar as a Commodity - dummies

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.

Top Sugar Producers
Country Production (Thousands of Tons)
Brazil 33,591
India 27,174
China 11,630
United States 7,661
Thailand 7,011
Mexico 5,543

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)
Ticker symbol SB SE
Contract size 112,000 pounds 112,000 pounds
Underlying commodity Global sugar Domestic (U.S.) sugar
Price fluctuation $0.01/pound $0.01/pound
($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.