Sugar ETFs Look Sweet as Broader Markets Sour | ETF Trends

China’s economy may be slowing but the country’s appetite for sweets is not. The strengthening demand has helped support sugar prices and commodity-related exchange traded products for a third day.

On Friday, the iPath Bloomberg Sugar Subindex Total Return ETN (NYSEArca: SGG) gained 1.3% and Tecrium Sugar Fund (NYSEArca: CANE) rose 1.8%. Since the Tuesday low, SGG increased 6.6% and CANE advanced about 5.0%.

ICE sugar futures were hovering around $0.1492 per pound Friday.

Sugar prices have been rallying on speculation that Chinese demand has been so voracious that more sugar is being smuggled into the country than previously though, Agrimoney reported.

“Reports of increased smuggling of whites into China from Myanmar and Thailand continue to circulate and given high domestic prices there and also in India and Brazil, whites is becoming the ‘story,'” Nick Penney, senior trader at Sucden Financial, told Agrimoney.

Sugar prices are also receiving a boost from the supply side as India’s top sugar growing state of Maharashtra expects to shift into a less water-intensive crop due to a scorching drought, Reuters reported.