Trading CFDs on Sugar
Among the most frequently traded products in the global market is sugar. Almost 80% of the global sugar production is produced by sugarcane, a perennial grass that can be cultivated in subtropical and tropical areas. The remainder 20 per cent comes from sugar beets that are developed largely from the areas with a temperate climate.
In general, sugarcane and sugar beets are made in more than 100 nations globally. The world’s greatest sugar producers are India, Brazil, China, Pakistan and Thailand. The commodity market is a very volatile market and is affected by various factors such as weather, global demand that paves the way for exciting opportunities for commodities trader
Traders use sugar futures as a hedging tool to protect themselves from market risks. It also provides opportunities for portfolio diversification. Sugar futures price are expressed in US dollar per 100 pounds (1CFD includes 100 pounds, 1 lots contains 5000 of 100-pound equivalent sugar packs).Instrument – Sugar
Currency – USA
Spread – $0.02 over market
Margin – 3.00%
Trading hours (GMT) – 08:30- 17:59
What influences the price of sugar?
The demand for sugar in the global market causes fluctuation in the prices of wheat. As the economics of countries grow, people accumulate more purchasing power and their appetite for sugar products may grow as well, which will drive the demand for sugar. History has witnessed that demand for sugar has been rising for decades, with a vast majority of the increasing demand coming from emerging markets.
A farmer needs a favourable condition to grow crops as these crops have been cultivated in places where weather is more favourable to them. Any impact of climate change is very likely to contribute to prices as the yields will be impacted by any shift in weather.
Hedge against US Dollar and Inflation
Sugar is way to bet on a weak US dollar and inflation that is high since commodities like sugar are priced in US dollars. In the last few decades, monetary policies that have kept the US dollar poor have been affirmed by the US federal Reserve Banks. US policymaker wants this weakness to encourage consumer spending and borrowing and to strengthen US exports. Continuation of those policies will help sugar rates and can spur inflation.
Advantages of trading Sugar CFD with Capital Street FX
As most of the traders speculate on the price movement and won’t need sugar in physical form. This is why the most useful instrument for traders in the contract for difference (CFD). This allows traders to buy or sell without owning the underlying instrument. It also gives freedom to trade a particular market from either side, i.e. a trader can go long or short according to his strategy. CFD is a very cost-efficient instrument. The brokerage on CFDs is also very low.
Why trade Sugar CFD with CAPITAL STREET
- BROAD RANGE OF MARKETS- Access to the popular commodities markets, including energy, metal, and agricultural products.
- CSFX offers you our stat of the art platforms and range of trading tools
- Trade using Margin- Get greater exposure to the marketplace with a small deposit and spread your capital using margin.
- Automate your trade facilities and direct access to the market
- Safety of funds