As of July 11, 2017, the near-month sugar futures for both the No. 11 and No. 5 contracts extended losses, continuing last week’s trend. The No. 11 contracts are traded in the United States, while the No. 5 contracts are traded in London. The numbers indicate the shipping cost structure for those commodities.
On July 11, the near-month futures for sugar commodity No. 11, expiring on September 29, 2017, fell 3.6% to 13.5 cents per pound, from 14.0 cents per pound a week ago. The current prices are far from the peak of a little under 24.0 cents per pound a year ago in 2016, as you can see in the above graph. Year-over-year, No. 11 sugar is trading 34.0% lower.
Similarly, the near-month futures for sugar commodity No. 5, expiring on July 14, 2017, fell 2.0% to $398 per metric ton, from $410 per metric ton a week ago. The No. 5 sugar commodities were trading about 28.0% lower year-over-year as of July 11.
The forward curve for all future maturities for the No. 11 commodity has shifted lower week-over-week, as you can see in the above graph. This trend was also observed for the No. 11 commodities, which aren’t shown in the graph.
Falling sugar prices certainly help confectionary producers (SGG) such as Mondelēz International (MDLZ), Hershey (HSY), Tootsie Roll Industries (TR), and Rocky Mountain Chocolate Factory (RMCF) by lowering their input costs. These companies also use cocoa commodities for their products. We’ll look at cocoa commodities in the next part of this series.