|Tick Size||0.01 cents per pound ($11.20 per contract)|
|Contract Size||112,000 pounds (50 long tonnes)|
|Months||Mar, May, Jul, Oct (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 worldwide, 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 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 sugar production from cane is increasing relative to that produced from beets. Sugarcane is a perennial plant, while the sugar beet is an annual plant. Due to its longer production cycle, sugarcane production and the sugar processed from that sugarcane 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 Futures U.S. exchange, while white sugar is traded on the ICE Futures Europe exchange. The most actively traded contract is the No. 11 (World) sugar contract at the ICE Futures U.S. 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 ICE Futures Europe 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) traded sideways to higher into Q2 of 2022. Russia's invasion of Ukraine in February roiled global commodity markets and sent crude prices soaring to a 14-year high, supporting sugar prices. Strength in oil prices benefits ethanol prices and pressures Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies. Sugar also found support after India, the world's second-largest sugar producer, said it was considering restrictions on sugar exports to prevent domestic prices from surging. Sugar prices tumbled to a 1-1/2-year low of 17.20 cents per pound in August. A rebound in sugar production in Thailand, the world's second-biggest sugar exporter, weighed on prices after Thailand's 2021/22 sugar cane output was forecast to jump +35% yr/yr to a 3-year high of 90 MMT. Also, India said in July that it would allow its sugar mills to export more sugar than previously permitted to prevent contract defaults. India's 2021/22 sugar exports jumped +57% y/y to a record 11 MMT. Sugar prices then traded sideways into October. Weakness in the Brazilian real weighed on sugar prices after the real dropped to a 1-year low against the dollar in November. A weaker real encourages export selling by Brazil's sugar producers. Also, the International Sugar Organization (ISO) on Nov 22 projected that global 2022/23 sugar production would climb +5.5% y/y to a record high of 182.1 MMT. Also, ISO projected that the 2022/23 global sugar market would have a surplus of +6.2 MMT. However, sugar prices pushed higher into year-end after India said it would limit its 2022/23 sugar exports to 9 MMT to safeguard domestic supplies. Sugar prices finished 2022 up +6.1% yr/yr at 20.04 cents per pound.
Supply - World production of centrifugal (raw) sugar in the 2022/23 marketing year (Oct 1 to Sep 30) is expected to rise by +1.6% yr/yr to 183.150 million metric tons, a forecasted record high. The world's largest sugar producers in 2022/23 are expected to be Brazil with 20.8% of world production, India with 19.5%, and the European Union with 8.8%. U.S. sugar production in 2022/23 is expected to fall by -0.6% yr/yr to 8.241 million metric tons. U.S. production of cane sugar in 2022/23 is expected to rise by +5.0% yr/yr to 4.199 million short tons, and beet sugar production is expected to fall by -2.1% yr/yr to 5.048 million short tons. World ending stocks in 2021/22 fell by -11.6% yr/yr to 44.488 million metric tons, moderately below the 2018/19 record high of 52.871 million metric tons.
Demand - World domestic consumption of centrifugal (raw) sugar in 2021/22 remained unchanged from 2020/21 at 174.477 million metric tons. U.S. domestic disappearance (consumption) of sugar in 2021/22 was down by -0.1% yr/yr at 12.340 million short tons.
Trade - World exports of centrifugal sugar in 2022/23 are expected to rise by +2.1% yr/yr to 69.252 million metric tons. The world's largest sugar exporters in 2022/23 are expected to be Brazil at 40.7% of total world exports, Thailand at 15.9%, and India at 13.6%.
U.S. sugar exports in 2021/22 fell by -32.7% yr/yr at 35,000 short tons, which is far down from the 3-decade high of 422,000 seen in 2006/07. U.S. sugar imports in 2022/23 are expected to fall by -5.6% yr/yr to 3.123 million metric tons.
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