how is sugar traded?
Sugar is a primary product used in a variety of different industries. As such it is widely traded internationally. Like many other commodities, sugar is traded using futures contracts. These are agreements to buy or sell a certain amount of sugar at an agreed price on a date in the future. The two benchmark sugar contracts are the Sugar No. 11 contract, for raw (semi-refined) sugar, and the Sugar No. 5 contract, for refined ‘white’ sugar.
The difference between raw and white sugar is due to the different crops involved. Sugar cane is usually semi-refined locally, then shipped ‘raw’ to the country of use where it is further refined. Making sugar from beet is a continuous process that produces white sugar at one location.
Around two-thirds of traded sugar worldwide is raw sugar, with white sugar making up the rest. Some raw sugar is sold for direct consumption; this includes ‘brown’ sugars like Muscovado and Demerara.