Investing in Sugar
About two thirds of the world’s sugar production is grown from sugar cane, a plant which loves the warm weather and is grown abundantly in Brazil, India, China and the Southern US.
The soft commodity can also be produced from sugar beets, which don’t need a hot climate and are cultivated in Germany, France and Russia. To make sugar, both cane and beet need to be processed, but the end product is the same regardless of the source.
In countries such as Brazil and India sugar cane is used not only to make sugar but also for ethanol which is mixed with petrol to reduce the cost of fuel. A rise in oil prices will typically prompt more ethanol production and the sugar cane will be diverted away from sugar processing, making it more expensive.
Sugar is also widely available as a CFD or spread bet and the price will usually be nominally based on the price of sugar futures in Chicago.
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