Today’s Pickup: Sugar Commodity Futures Are At The Lowest In Nearly Three Years As Demand Decreases

Commodity prices have generally been rising this year, except probably sugar which has been tumulting down to nearly breach its three-year low. One of the primary reasons for the fall is basic supply and demand economics – global sugar production is at a record high, while the demand for sugar is falling across all levels in the food industry.

The fall in demand could be attributed to the increased consciousness of consumers about the ill-effects of excessive sugar consumption. In the U.S., artificial sweeteners are an ubiquitous presence across food supplies – it is present in soda, classic Cola, low-fat yoghurt, chocolates, granola bars, and even in ketchup. Added sugars contribute to 17% of the calorie intake of an adult in the U.S. and 14% of that of children.

As supply and demand face a disconnect, it shows on the tanking commodity futures value of sugar. The raw sugar futures have fallen by 30.5% this year on the ICE Futures U.S. exchange, making it the worst performing commodity of the year. But the world prices would not reflect in the actual sugar prices in U.S. markets, as the country has trade protection on the commodity since 1789 when the Congress enacted the first tariff against foreign-produced sugar. For instance, in 2013, American consumers paid 6 cents more per pound than average world price, ending up spending an unnecessary $1.4 billion more for sugar.

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