Soft commodities risk management: navigate sugar markets with StoneX

Sugar futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of sugar at a predetermined price on a future delivery date. Sugar futures are a popular way to trade sugar, as they enable market participants to manage price risk, and consumers and producers trade sugar futures to secure selling or purchase prices. Futures are the most popular way of trading sugar if you want to invest in the physical commodity, offering high liquidity and volatility.

ICE offers two sugar contracts: one that trades into 112,000 pounds of world sugar #11 (the benchmark for raw sugar worldwide) and the white sugar #5 futures contract that trades into 50 tones (the global benchmark for the pricing of physical white sugar). Both are traded globally on the ICE electronic trading platform. The world sugar #11 contract has four expiration months: March, May, July, and October; while the white sugar #5 futures contract has five expiration months: March, May, August, October, and December. Futures are derivative instruments that can be added to a comprehensive risk management strategy, while also allowing speculators to make leveraged bets on commodity prices. To trade in futures, traders need a high level of sophistication, given the impact of factors such as storage costs and interest rates on pricing.