Having your cake and profiting from it
Most people would not recognize a direct link between their dessert and financial markets, but sugar trading is an exciting area with great potential. We recommend looking into this market as a potential addition to your investment portfolio.
The market encompasses all edible carbohydrates, which, besides sugar, include also fructose, lactose, sucrose, etc. The raw material used to produce these is sugar beet for temperate climates, and sugar cane in tropical areas.Sugar commodities have their own ticker symbol and are traded in a way very similar to other commodities.
What makes the sugar market attractive is that it enjoys long-term growth thanks to the reliable demand for sugar for various applications. Certain fluctuations do occur just like in any other market, but demand remains high and keeps increasing.
Not surprisingly, a great part of that demand is made up of the food and beverages industry, which uses sugar in everything from fizzy drinks to chocolate bars and diverse snack foods. Even pizza dough often contains a certain amount of sugar! But sugar is also used in other sectors like the production of ethanol – a promising alternative to fossil fuels, and an exciting area for “green” investments in general.
Several factors have an influence on sugar prices. Supply and demand play a role just like with any other commodity, and these are closely linked to climate and weather conditions affecting crops, which can drive significant changes in sugar prices. Crop diseases, natural disasters, droughts, insect patterns all affect the supply side of the market and determine the trading value of sugar.
Sugar can also be traded as futures options, making a great addition to a diversified portfolio.