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About Sugar (SB)
Sugar is produced from the sugar cane plant and the sugar beet
plant. Sugar cane is grown in tropical and semi tropical climates,
and resembles a bamboo like grass. The sugar beet is grown in
temperate zones, and is a bush plant with a large long white tapering
root (or the beet). Although the growing conditions, location,
and processing techniques used on the two types of sugar are very
different, the refined finished product is indistinguishable.
The refined finished sugar is what is traded on the Coffee, Sugar,
and Cocoa Exchange (CSCE).
The bulk of the sugar produced throughout the world, remaining
after domestic consumption, is sold internationally under special
protective agreements. Of the available supply after domestic
consumption, roughly 20% is available to be sold on the free market.
It is this "free market" sugar, which is referred to
as World Sugar. The trade in World Sugar is monitored by the International
Sugar Organization (ISO), a voluntary alliance of sugar importing
and exporting nations. The number eleven denotation on the end
refers to the grade that is excepted at par value for the contract.
Less and more refined grades of sugar are deliverable at discounts
and premiums to the futures final settlement price.
Sugar production has increased over 300% over the last quarter
of a century. The bulk of this sugar is consumed in the same country
where it is produced, roughly seventy percent is consumed domestically.
The remaining sugar that is not set aside under the special protective
agreements, is available as supply to the "free market".
So domestic demand for sugar has a great effect on the supply
of World Sugar.
Beet Sugar is planted in the early spring and harvested before
the first winter freeze. Beet sugar is grown in temperate climates
such as the former Soviet States, and Europe. Beet Sugar is grown
in the United States mainly in California and Minnesota.
Sugar Cane is usually planted in the previous years spring season.
The sugar cane plant is not ready to be harvested for approximately
18 months after planting. Sugar cane harvests usually take place
from the fall to the following spring. Brazil, India, and Cuba
are the largest sugar cane producers. In the United States, sugar
cane is grown in Hawaii, Louisiana, and Florida predominantly.
Historically Sugar has been an important factor in international
trade. Sugar is produced throughout the world, and is considered
a luxury item in many countries throughout the world. But in recent
years, the sugar producing countries are using sugar as a staple
in their every day diets, and consuming the bulk of their production
domestically.
The demand for world sugar is tied to many long term macro population
and political trends. Per Capita Income levels and population
growth rates are two very important influences on the price of
world sugar. Politics also play an important role in determining
the price of world sugar. The United States, for example, imports
sugar on a USDA import quota system, typically paying domestic
sugar prices (usually higher than World Sugar prices). Changes
to import and export quotas can have enormous effect on the demand
for imported sugar. Changes to the method of payment for sugar
from importer to exporter, can have dramatic effects on the demand
for sugar.
The increase in income levels of developing nations, such as
in the Far East and South America, have increased the demand for
sugar. The availability of alternative sweeteners, such as nutra-sweet
and corn syrup, have dampened the demand for sugar, slightly.
The major sugar importing nations are the United States, Great
Britain, Germany, and the former Soviet states.
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