Sugar: Trading
How one New York contract prices the world's raw sugar
How one New York contract prices the world's raw sugar What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.The benchmark is ICE Futures US Sugar No. 11, a raw cane contract quoted in US cents per pound and delivered free on board in producing countries. ICE Futures Europe's No. 5 contract prices refined white sugar in London, and the gap between the two is the white premium earned by refiners. Physical trade is dominated by large merchants such as Louis Dreyfus, Sucden, Alvean and Czarnikow. Blas & Farchy show traders financing Cuba's crop in the 1990s, lending oil against future sugar deliveries.
Where it is bought (buyers)
- Destination refiners in Indonesia, China, Malaysia, Morocco, the Gulf and Bangladesh buy raw sugar cargoes, mostly from Brazil
- US cane refiners buy under tariff-rate quotas and from Mexico under suspension agreements
- Food and drink companies buy refined white sugar under annual or quarterly contracts
- Indian bulk buyers and traders buy from mills through tenders within monthly release quotas
Where it is sold (sellers)
- Brazilian mills sell raws FOB Santos and Paranagua through trading houses
- Thai, Australian and Central American mills sell raws, often under term deals
- Indian mills export plantation white and raws to neighbouring Asia, the Middle East and East Africa when quotas allow
Exchanges and benchmarks
| Venue | Contract | Notes |
|---|---|---|
| ICE Futures US | Sugar No.11, raw cane, 112,000 lb, US cents/lb, FOB origin | world raw sugar benchmark |
| ICE Futures Europe | White Sugar No.5, US$/t, FOB | benchmark for refined sugar; white premium versus No.11 |
| ICE Futures US | Sugar No.16, US domestic raw sugar | reflects the protected US market |
| Zhengzhou Commodity Exchange | White sugar futures | Chinese domestic price |
| India | no liquid sugar futures | prices set in mill tenders; ISMA and trade bodies publish ex-mill prices |
Contract types
- Raw sugar cargoes priced at an ICE No.11 futures month plus or minus a premium, fixed later by the buyer or seller
- Long-term supply deals between mills and refiners
- White sugar sold FOB or CIF on ICE No.5 plus premium
- Indian ex-mill tenders under monthly quotas; export contracts within the government quota
Top trading houses
- Alvean (Copersucar)
- Wilmar
- Louis Dreyfus Company
- Czarnikow
- Sucden
- Cargill
How prices are discovered
- ICE No.11 and No.5 settlement prices
- Physical premiums and white premium assessed by S&P Global Commodity Insights and Czarnikow
- UNICA and CEPEA data for Brazilian ethanol parity
- ISMA and mill tender prices for India