How to invest in sugar (2024)?

You can invest in stocks, but you can also choose to invest (a portion of) your wealth in commodities. This includes oil, natural gas, gold, silver, copper, and even sugar. In this article, you will learn how to invest in sugar.

Sugar as an investment product

When you think of commodities, you generally think of products such as oil, natural gas, and gold. What many people do not know is that sugar is one of the most widely used commodities in the world. If you want to invest in commodities, you can also decide to invest in sugar.

You don’t just put sugar in your coffee, but it is also added to many other products. This includes cookies, candy, soft drinks, and even many products you wouldn’t expect. The sugar industry is a multi-billion dollar industry, which can certainly be worth your investment.

How to invest in sugar?

Option 1: invest in sugar stocks

You can choose to invest in sugar by buying shares of companies that deal with this commodity. This includes sugar producers such as Imperial Sugar Company and Alexander & Baldwin. You can also invest in candy makers like Hershey and Tootsie Roll Industries.

You can buy sugar stocks with one of these reliable brokers:

eToro buy stocksBuy sugar without commissions. Your capital is at risk. Other fees may apply.
Plus500 trade stocksSpeculate with CFD's on increasing & decreasing prices of sugar! 80% of retail CFD accounts lose money.
DEGIRO buy sharesBenefit from low fees, an innovative platform & high security!
Avatrade buy sharesSpeculate on price increases and decreases of sugar with a free demo!

Option 2: trade price movements of sugar

You can also decide to actively speculate on the price movements of sugar. You can do this by using derivatives. With a derivative, you can speculate on rising (long) and falling (short) prices.

The price of sugar can fluctuate significantly in the short term. It is therefore important to apply a solid strategy when trading in sugar. Do you want to try trading in sugar? Open a free demo account with an online broker:

Investing in sugar ETFs

You can also decide to invest in sugar with an ETF. An ETF is a fund that passively tracks the price of a commodity or a selection of stocks. Examples of sugar ETF’s are:

  • iPath Series B Bloomberg Sugar Subindex Total Return ETN
  • Teucrium Sugar Fund
  • iPath Pure Beta Sugar ETN

A disadvantage of investing in sugar with ETFs is the fact that you have little control over your investment.

Investing in Sugar

What are the advantages of investing in sugar?

1. Sugar is a mass product

A major advantage of sugar is that it is a mass product, which makes it difficult for other parties to influence its price. This reduces the chance of price manipulation.

2. The demand for sugar is increasing

The increasing demand is also a benefit of investing in sugar. In emerging economies, the average person’s wealth increases rapidly. More and more people want to buy sweet products such as ice cream and syrup. The increase in demand for sugar can drive up its price.

3. Sugar is in almost everything

Sugar is an essential product that is difficult to avoid. In the Netherlands, the average person consumes between 50 and 80 grams of sugar per day. Sugar is added to many products. Did you know that you can even find sugar in bread? These are all tricks used by food producers to get us addicted to certain types of foods.

4. Chance of significant price increases

The biggest advantage of investing in sugar is the potential for high returns. In special circumstances, such as crop failures, the price can suddenly increase significantly. As an active trader, you can take advantage of these conditions and turn the movements into sweet profits! However, keep in mind that you can also lose a lot of money if you make the wrong decision.

5. Protection against inflation

Commodities often rise with inflation, which makes investing in the commodity sugar attractive.

6. Investing in the dollar

The price of sugar is quoted in US dollars. If you believe that your currency is becoming weaker, you can use a sugar investment to hedge against this risk.

What are the disadvantages of investing in sugar?

1. No direct income from sugar

Sugar itself does not provide you with direct income. When you invest in a company, you typically receive a profit share in the form of dividends. Of course, you can bypass this disadvantage by buying shares in companies that are active in the sugar industry.

2. More emphasis on health

Another risk for investments in sugar is that the product has a bad image. People are increasingly focused on their health and try to eliminate sugar as much as possible. If this trend continues, demand for sugar may decrease in the future.

3. Risk of fines

It is also important to remember that the sugar industry is closely monitored, for example, by the European Commission. Misconduct is punished severely. If you invest in a company that engages in shady practices, things can easily go wrong. In Europe, companies are frequently fined heavily.

What influences the price of sugar?

When you invest in sugar, you need to determine whether the price will rise or fall. To accomplish this, it is essential to look at the difference between production and consumption. If production is greater than consumption, this can put pressure on prices.

Most sugar cane comes from Brazil and India. When predicting the price, you can therefore look at these regions. Extreme weather in Brazil, for example, can lead to crop failures, reducing the supply. With lower supply, the price will rise.

Furthermore, the exchange rate in these countries can influence the price of sugar. If the Brazilian real strengthens, farmers may choose to sell more sugar domestically. This can cause the price to rise on the world market.

Furthermore, pay attention to the demand for ethanol, as this commodity is a direct competitor of petrol. Sugar is needed to make ethanol.

Finally, farmers may decide to switch to another crop when income from sugar cane decreases. This can occur when import duties are levied or when farmers’ debts increase. When investing in sugar, it is therefore important to keep an eye on factors that can affect supply.

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Alex Mostert Avatar
Over Alex Mostert

When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about! Don’t hesitate to leave a comment under this article.

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