Sugar #11 Oct '19 (SBV19)
|Tick Size||0.01 cents per pound ($11.20 per contract)|
|Contract Size||112,000 pounds (50 long tonnes)|
|Trading Months||Jan, Mar, May, Jul, Oct (F, H, K, N, V)|
|Trading Hours||2:30a.m. - 12:00p.m. (Settles 11:55a.m.) CST|
|Value of One Futures Unit||$1,120|
|Value of One Options Unit||$1,120|
|Last Trading Day||Last business day of the month preceding delivery month|
The white crystalline substance called "sugar" is the organic chemical compound sucrose, one of several related compounds all known as sugars. These include glucose, dextrose, fructose, and lactose. All sugars are members of the larger group of compounds called carbohydrates and are characterized by a sweet taste. Sucrose is considered a double sugar because it is composed of one molecule of glucose and one molecule of fructose. While sucrose is common in many plants, it occurs in the highest concentration in sugarcane (Saccharum officinarum) and sugar beets (Beta vulgaris). Sugarcane is about 7 to 18 percent sugar by weight while sugar beets are 8 to 22 percent.
Sugarcane is a member of the grass family and is a perennial. Sugarcane is cultivated in tropical and subtropical regions around the world roughly between the Tropics of Cancer and Capricorn. It grows best in hot, wet climates where there is heavy rainfall followed by a dry season. The largest cane producers are Florida, Louisiana, Texas, and Hawaii. On a commercial basis, sugarcane is not grown from seeds but from cuttings or pieces of the stalk.
Sugar beets, which are produced in temperate or colder climates, are annuals grown from seeds. Sugar beets do best with moderate temperatures and evenly distributed rainfall. The beets are planted in the spring and harvested in the fall. The sugar is contained in the root of the beet, but the sugars from beets and cane are identical. Sugar beet production takes place mostly in Europe, the U.S., China, and Japan. The largest sugar beet producing states are Minnesota, Idaho, North Dakota, and Michigan. Sugar beets are refined to yield white sugar and very little raw sugar is produced.
Sugar beets and sugarcane are produced in over 100 countries around the world. Of all the sugar produced, about 25% is processed from sugar beets and the remaining 75% is from sugar cane. The trend has been that production of sugar from cane is increasing relative to that produced from beets. The significance of this in that sugarcane is a perennial plant while the sugar beet is an annual, and due to the longer production cycle, sugarcane production and the sugar processed from that cane, may not be quite as responsive to changes in price.
Sugar futures are traded at the Intercontinental Exchange (ICE), the Bolsa de Mercadorias & Futuros (BM&F), Kansai Commodities Exchange (KANEX), the Tokyo Grain Exchange (TGE), and the London International Financial Futures and Options Exchange (LIFFE).
Raw sugar is traded on the ICE exchange while white sugar is traded on the London International Financial Futures Exchange (LIFFE). The most actively traded contract is the No. 11 (World) sugar contract at the ICE exchange. The No. 11 contract calls for the delivery of 112,000 pounds (50 long tons) of raw cane centrifugal sugar from any of 28 foreign countries of origin and the United States. The ICE exchange also trades the No. 14 sugar contract (Domestic), which calls for the delivery of raw centrifugal cane sugar in the United States. Futures on white sugar are traded on the London International Financial Futures Exchange and call for the delivery of 50 metric tons of white beet sugar, cane crystal sugar, or refined sugar of any origin from the crop current at the time of delivery.
Prices - ICE World No. 11 sugar futures prices (Barchart.com symbol SB) posted their high for 2017 on the nearest-futures chart at 21.49 cents per pound in February on global production concerns. India, the world's second-biggest sugar producer, cut its 2016/17 sugar production by -10% yr/yr to a 7-year low of 22.5 MMT, and researcher Cepea forecasted that Brazil's Center-South 2017/18 sugar production would fall by 10-20 MMT yr/yr due to a lack of investment in agriculture and to smaller sugar acreage. Sugar prices then trended lower into June when they posted a 2-year low at 12.53 cents per pound as the global sugar supply outlook improved. The USDA projected that global 2017/18 sugar production would climb to a record 179.636 MMT and the ISO projected a global 2017/18 sugar surplus of 3 MMT versus a 2016/17 deficit of -6.465 MMT. Researcher Wilmar projected that Thailand's 2017/18 sugar projection would climb to a record 12 MMT and India estimated its 2017/18 sugar output would increase by +23% to 25 MMT, the first gain in three years. Sugar prices then recovered marginally into year-end as a weaker dollar and a rally in gasoline prices boosted short-covering in sugar by futures funds. The dollar index fell to a 3-year low, while gasoline climbed to a 2-year high, which benefited ethanol prices and bolstered speculation that Brazil's sugar mills would divert more sugar toward ethanol production. Unica reported sugar production in Brazil's Center South in the 2017/18 season through December rose +1.7% yr/yr to 35.823 MMT. Sugar prices finished 2017 down -22.3% at 15.16 cents per pound.
Supply - World production of centrifugal (raw) sugar in the 2017/18 marketing year (Oct 1 to Sep 30) is forecasted to rise +7.9% to 184.949 million metric tons for a new record high.
The world's largest sugar producers in 2017/18 are expected to be Brazil with 21.7% of world production, India with 15.0%, and the European Union with 10.9%. U.S. sugar production in 2017/18 is expected to fall 1.5% to 8.016 million metric tons, which will be a new record high. World ending stocks in 2016/17 fell -11.4% to 39.034 million metric tons. The stocks/consumption ratio in 2016/17 rose to 22.7% U.S. production of cane sugar in 2017/18 is expected to rise +1.8% to 3.912 million short tons and beet sugar production is expected to rise +0.4% yr/yr to 5.017 million short tons.
Demand - World domestic consumption of centrifugal (raw) sugar in 2017/18 is forecasted to fall by -0.2% yr/yr to 171.559, down slightly from the 2016/17 record high of 171.867 million metric tons. U.S. domestic disappearance (consumption) of sugar in 2017/18 is expected to rise +1.8% yr/yr to 12.703 million short tons. U.S. per capita sugar consumption in 2014/15 rose +0.6% to 68.39 pounds per year, which was only about two-thirds of the levels seen in the early 1970s.
Trade - World exports of centrifugal sugar in 2017/18 are expected to rise +4.8% yr/yr to 61.852 million metric tons, a new record high. The world's largest sugar exporter will continue to be Brazil, where exports in 2017/18 are expected to rise +3.9% yr/yr to 29,600 million metric tons, which will account for 47.9% of total world exports. The next largest exporters ae expected to be Thailand with 13.9% of world exports and Australia with 6.0%. U.S. sugar exports in 2017/18 are expected to fall -80.0% yr/yr to 25,000 short tons, which is down from the 15-year high of 422,000 seen in 2006-07. U.S. sugar imports in 2017/18 are expected to rise +14.3% yr/yr to 3.366 million short tons.
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