Commodity CFD Trading Investing in Sugar
Read this article to learn about commodities CFD trading.
Sugar is a soft commodity, one that is grown as opposed to one which is extracted through mining, such as copper, which is a hard commodity. There are a number of factors that influence the price of sugar.
While government’s trade policies are the main influence on the price of sugar, weather is an important factor too, making the price of sugar subject to sudden fluctuations. Brazil is the world’s largest sugar producer, followed by India, the EU and China. India is also the world’s largest consumer.
The price of sugar reached a 29-year high on 1 February, 2010 as investors reacted to reports that sugar harvests in Brazil and China for 2009-10 were going to be worse than expected. However these fears did not materialise, in fact, short-term sugar production prospects in both Brazil and India look very positive with harvests actually looking to be better than expected.
This has caused a 43% fall in prices since the high seen in February. If a commodity price is falling it’s only human nature for buyers just to hold on a little bit longer just to see whether they can get the cheapest possible price and this has also dampened the demand for sugar.
One thing that will always remain completely unpredictable is the weather. If India was to experience a difficult monsoon season then this could alter prospective sugar yields making the commodity more favourable to investors eager to take advantage of any price increases due to falls in supply levels.
What does the future hold for the price of sugar?
If you’re planning to make a success of trading long-term it really does pay to constantly work on improving your knowledge of the financial market you want to trade.
Commodity prices are influenced by a range of factors. It’s important to understand to what extent these factors will alter the price of a commodity.
The value of the US dollar has a huge influence over the price of gold is a good example. Another would be the price of oil, which is heavily influenced by consumer and industry demand.
CFD trading is fast becoming a popular way to trade commodities. A good place to start trading CFDs is with IG Markets which is the UK’s leading CFD trading provider. They offer an extensive range of research resources and expert market analysis and commentary to help you increase your commodity CFD trading knowledge.
As we’ve seen, commodity prices can be subject to fluctuations so it’s important you are aware that guaranteed stops are available on any trade you make.
CFDs are a leveraged product and can result in losses that exceed your initial deposit. CFD trading may not be suitable for everyone, so please ensure that you fully understand the risks involved.
Tags: cfd, CFD trading, cfds, commodities, commodities cfd trading
