Everything Investors Need to Know About Sugar Futures

There are a number of agricultural commodities that occupy both analysts and investors time, but there’s one with high volume that often seems to go unnoticed, and that’s sugar.

Wheat, corn and soybeans usually dominate the headlines as they pertain to agricultural investments with high daily volumes and their impact on global food supply and newly developed industries like biofuels. But sugar is a vital component in the food industry used in everything from food manufacturing to soda beverages like Coca-Cola.

One thing investors will note about many agricultural commodities like wheat is that there may be more than one type of contract that covers different varieties or strains of that crop. Similarly, they will notice that there are two different sugar contracts to choose from – world sugar #11 and U.S. sugar #16.

But unlike other commodities, the difference in sugar futures contracts isn’t the commodity itself, but rather where it trades. As the name suggests, sugar may be global (world sugar #11) or domestic (U.S. sugar #16). The reason is due to subsidies paid to sugar farmers and tariffs that tax the importation of sugar from other countries.

Learn more here about choosing the right commodity mutual fund.

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