Should I Invest in Sugar?

Sugar is a carbohydrate that has been used as an ingredient in food for thousands of years.

Today consumers use sugar to flavor foods (e.g. chocolates), to help retain moisture in baked goods (e.g. cakes), and to preserve and gel other foods (e.g. jellies and jams). Sugar can also be used to make ethanol fuel.

These diverse applications make sugar an important commodity on the global markets. 

Sugar is a volatile commodity, so investing in it could produce big gains or losses. However, investing in sugar isn’t just for speculators. 

Commodities such as sugar can be a way to mitigate risk in an investment portfolio by providing asset diversification.

A basket of commodities that includes sugar, other soft commodities, metals and energy insulates a buyer from events that affect a particular commodity’s price.

Investing in sugar is also a way toprofit from 3 long-term trends:

•  Growing wealth in emerging markets could boost sugar consumption.

•  Global warming trends could disrupt sugar production and lead to supply shocks.

•  Demand for oil and gasoline could decline in the coming decades, and demand for ethanol could grow. 

Overconsumption offossil fuels combined with heightened environmental concerns could hasten thistrend and produce higher sugar prices.

Investing in sugar, however, has its risks including: 

• Heightened concerns about a global obesity epidemic could curb demand.

• Strength in the US dollar could lead to weakness in commodities across the board. 

• Increased government subsidies of sugar could produce an oversupply that dwarfs demand.

• Sugar substitutes such as aspartame and stevia could drive market demand away from sugar.

• Sugar is a volatile commodity that could move lower without any specific catalyst.

Should I Invest in Sugar? Sugar is a volatile commodity, so investing in it could produce big gains or losses. However, investing in sugar isn’t just for speculators. Commodities such as sugar can be a way to mitigate risk in an investment portfolio by providing asset diversification. A basket of commodities that includes sugar, other soft commodities, metals and energy insulates a buyer from events that affect a particular commodity’s price. Investing in sugar is also a way to profit from 3 long-term trends: Growing wealth in emerging markets could boost sugar consumption. Global warming trends could disrupt sugar production and lead to supply shocks. Demand for oil and gasoline could decline in the coming decades, and demand for ethanol could grow. Overconsumption of fossil fuels combined with heightened environmental concerns could hasten this trend and produce higher sugar prices. Investing in sugar, however, has its risks including: Heightened concerns about a global obesity epidemic could curb demand. Strength in the US dollar could lead to weakness in commodities across the board. Increased government subsidies of sugar could produce an oversupply that dwarfs demand. Sugar substitutes such as aspartame and stevia could drive market demand away from sugar. Sugar is a volatile commodity that could move lower without any specific catalyst.

Read more at: https://commodity.com/soft-agricultural/sugar/trading/