General information about sugar:
There are two types of sugar; one is produced from sugar cane which represents the majority of sugar traded worldwide, and the other which is produced from sugar beet. Sugar is a commodity used in food and the alimentary industries, but it is also a component of ethanol, a bio fuel that is currently experiencing great expansion.
Sugar is mainly produced in Brazil and India but also in the European Union and China to a lesser extent. It is interesting to note that the European Union, which produces white sugar and imports raw sugar, has succeeded in securing preferential agreements on the price over several decades. The sugar traded on the financial markets and stock exchanges represents only around a third of the sugar worldwide.
A pertinent analysis of the sugar price in real time:
Before even starting your technical analysis of the sugar price do ensure that you take the time to carefully choose the type of chart upon which you will base your study. In fact the best charts for this are considered to be those that include tools that facilitate the identification of major events such as mobile averages, volatility as well as pivot points, and technical support and resistance levels.
In accordance with your investment profile you can also modify the time periods of the charts by choosing charts displayed in minutes for Day Trading and historical charts for longer term trading positions.
Sugar price and trading on the New York Stock Exchange:
Whether it is in the form of spot trading, futures contracts or options, the vast majority of sugar trading is completed on the CSCE (Coffee Sugar and Cocoa Exchange of New York) which is part of the NYMEX, or New York Mercantile Exchange, as well as in Tokyo at the TGE, Tokyo Grain Exchage. The price is quoted in American Dollars.
The only sugar traded on the New York Stock Exchange is raw sugar, from the production of sugar cane. Over 15 million contracts and options on sugar are completed each year on the NYMEX. White sugar is however traded on the LIFFE stock market (London International Financial and Options Exchange of London) at the rate of between 1.5 and 2 million contracts annually.
The price of sugar and its movements are influenced by various factors including of course supply and demand but also the exchange rate of the U.S. Dollar and the oil price. This correlation with oil is due to the use of sugar in ethanol production.
Historical analysis of the sugar price on the New York Stock Market:
Sugar trading on the stock markets is completed through futures contracts or spot trading as well as through the use of options. The sugar price is quoted on the Coffee Sugar and Cocoa Exchange of New York (CSCE) which is part of the NYBOT (New York Board of Trade) as well as the Japanese TGE (Tokyo Grain Exchange).
It is important to note that the price of raw sugar features only on the TGE whereas white sugar is quoted on the NYSE-Euronext.
Over the last five years the price of sugar has experienced a major fall on the New York Stock Exchange and it appears to continue following this falling trend.
We can however observe numerous movements over the medium term that can be highly advantageous for online traders.
Fundamental analysis of sugar in real time:
To obtain precise and quality information relating to the sugar price it is clear that in addition to technical analysis you will also require a fundamental analysis to study the influential factors that may lead to a rise or fall in the price.
This will be the case for production data on this commodity, as well as those resulting from the demand.
The indicators to follow for trading in sugar:
To trade in the price of sugar on the stock markets you will need to take certain different indicators into account, these are the most significant:
- Supply and demand, this is the difference between the volume produced and the global demand of the agro-alimentary industry.
- The climatic conditions, notably in the larger producing countries, also have a major impact on the price of sugar.
- Finally, the oil prices represent preferential indicators as they are indirectly correlated with the use of sugar for the manufacture of bio-fuels. This correlation is positive in that a rise in the price of one leads to a rise in the price of the other.