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Your guide to trading Sugar Futures at Orbex.com

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Sugar futures are one of the many soft commodity futures contracts available to trade at Orbex.com. Known to be one of the most liquid contracts in the soft commodities category, sugar futures are also volatile which attracts both long term and intraday traders.

Perhaps one of the biggest advantages of trading the sugar futures contracts has to do with the fact that this soft commodity is seasonal and it offers a bit of certainty in what to expect from prices during the respective seasons.

An important thing to know about sugar futures is that the contracts being traded are for what is known as Sugar No. 11 (SB) futures which is the raw cane sugar. This is very different to the refined white sugar (W).

Sugar is derived from sugar cane which is the primary source of sugar having a majority share and sugar beets. Brazil, India, China are the top producers of sugar cane while the EU (Germany and France) are the top producers for sugar beets.

Sugar Futures: Ticker and Contract expiration

Sugar Futures Contracts: Sugar No. 11/ SB
Sugar Futures Contracts: Sugar No. 11/ SB

The sugar futures contracts can be accessed from the Orbex.com MT4 platform’s Market Watch window. The futures contract is seen under the ICE commodities category with the ticker SB_xx where xx denotes the expiring month’s contract. For example, the current sugar futures contract ticker is SB_7H where &h denotes March 2017 expiring contract. You can also see the last trading day for the contract, which in this case is 27 February 2017.

Each sugar futures contract represents 112,000 pounds with the contracts assigned for March, May, July, and October. This longer term contract expiration can be an added advantage, especially between the periods of October and March.

The sugar futures are traded between 02:30 AM – 14:00 PM EST which is around 09:30 AM through 09:00 PM in a GMT+3 timezone.

Sugar Futures Contract and Trade size

  • The margin required to trade a 1 lot contract size for Sugar futures is $1000.
  • A one tick move in the sugar futures prices is equal to $11.20 for 1 standard lot
  • The minimum tick is 0.01 with pricing in two decimals
  • A commission of $15 is applied when trading the sugar futures contracts
  • There are no overnight or rollover swaps applied to the sugar futures contracts

Production and usage of sugar

Sugar production/consumption, 2016/2017
Sugar production/consumption, 2016/2017

As mentioned, sugar is produced either from Sugar cane or sugar beets. The former grows best in a hot climate and therefore countries like Brazil, India, China, and Mexico are some of the countries where sugar cane is produced the most. Sugar beets, on the contrary, grow in cooler and temperate climates and is produced the most in France, Russia, Germany and the United States. Regardless of sugar cane or sugar beet, the production process is the same, which is to extract the sugar syrup and then crystallize the same which is then broken down into sugar crystals to form the raw sugar.

Sugar is used for both human consumption and also in energy production, mostly ethanol as well as in fabrics and in cement.

Trading sugar futures, what you should know?

CFTC CoT Report for Sugar No. 11
CFTC CoT Report for Sugar No. 11

Whether you are an intraday scalper or a swing trade, it is essential to follow the fundamentals to understand the reasoning behind the price developments.

  • As with most commodities, the weekly CFTC’s Commitment of Traders report offers insight into the speculative position for the futures contracts. The report can be accessed from here.
  • The US Department of Agriculture (USDA) provides timely reports and outlook on the sugar commodity and provides extensive details on the seasonality, production and consumption statistics.

Why trade sugar futures?

If you are looking for diversification or when your preferred markets are moving sideways (ex: forex during the summer months), the futures markets can be a good way to trade, irrespective of your trading style. Due to the seasonality pattern in the sugar markets, and the liquidity available, traders who are especially outside of the US will find sugar trading to be an ideal addition.

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