April 15, 2008 at 2:00 pm by Tom Lydon
Sugar is one commodity whose price remains relatively low when compared with historic highs, but it may not remain that way for long, leaving room to grow for exchange traded funds (ETFs).
Take Baltimore’s famous Berger cookies, the price of which one woman recently balked at: $4.59. We can personally attest to the worth-it-ness of that price. The cookies are simple: eggs, milk, sugar, flour and cocoa for that delicious mound of chocolate frosting on the top. Really, you should try them.
The price of all those ingredients has soared in recent months - except for sugar. In "real" terms, the price of sugar has been dirt cheap since the late 1980s, reports Graham Summers for Seeking Alpha.
Blame much of it on a bad reputation: sugar rots your teeth, makes you fat and makes your kids swing from the chandeliers.
But the populations of other countries are beginning to get a sweet tooth as they start eating more like we do (heaven help them), contributing to a demand for sugar that has increased 15% since 2002. Demand is beginning to outpace production: consumption has risen 4%, production has risen 1%.
The biggest sugar consumers per capita are, in order: Brazil, Mexico and Australia, according to Daniel Workman for Suite 101.
The London Stock Exchange has a sugar ETF, ticker symbol SUGA. In the United States, there is sugar futures exposure to be had in the PowerShares DB Agriculture (DBA).
Tags | Agriculture, Australia, Brazil, DBA, Emerging Markets, Latin America, Mexico
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April 16th, 2008 at 4:40 pm
Are there any ETFs with heavy weighting in sugar besides DBA? Are any U.S. based ETFs for sugar in the works? There is a growing glut of sugar right now and it is probably the biggest laggard of all the major commodities except perhaps for cotton, which actually makes it a low risk single commodity buy after it’s through basing.
April 23rd, 2008 at 3:02 pm
iPath DJ AIG Agriculture TR Sub-Idx ETN (JJA) tracks an index composed of seven futures contracts, one of which includes sugar.
Opta Lehman Cmdty Pure Beta Agric TR ETN (EOH) also tracks an index made up of eight futures contracts, including sugar.
There doesn’t appear to be a sugar-focused ETF currently in registration, but there are a number of agriculture ETFs in the pipeline, including long/shorts.