Trading sugar

Sugar is an essential commodity. Sugar No. 11 futures trade in the US on the ICE (Intercontinental Exchange) while the white sugar No. 5 futures trade in London. The numbers next to the sugar futures refer to the way shipping costs for these commodities are accounted for.

Uh Oh, Sugar Contango: Sugar Futures Last Week

Price movements

Last week (ended June 16), front-month sugar No. 11 futures closed at 13.4 cents per pound, falling week-over-week from 14.3 cents per pound one week previously (ended June 9). Sugar futures were significantly lower YoY (year-over-year) last week, falling from ~19.7 cents per pound.

The sugar No. 11 market is in contango, with the futures curve sloping upward for different maturities in the future. July 2018 futures were trading at 14.38 cents per pound, while May 2019 futures were trading at 15.82 cents per pound on June 16.

Hershey (HSY), Rocky Mountain Chocolate Factory (RMCF), Tootsie Roll Industries (TR), and Mondelez International (MDLZ) are among the major companies that require sugar and may consider hedging exposures to sugar commodities (SGG).

White sugar front-month futures closed at $399.2 per metric ton last week (ended June 16), which was lower week-over-week than the $417 per metric ton we saw one week previously (ended June 9). Notably, white sugar futures were trading at ~$536.0 one year ago. Futures with maturities on October 2017, December 2017, March 2018, and May 2018 all are trading lower than current levels.

Now let’s take a look at what happened with cocoa last week.

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