SOFTS OVERVIEW

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Refined sugar comes from two sources, sugar beets and sugarcane. Although the nature and location of production as well as the processing techniques for sugarcane and sugar beets are very different, the refined Sugar from each is indistinguishable.

Sugarcane is a bamboo-like grass that grows in tropical and semi tropical climates. Sugar beets are tubular plants, with a white, tapering root that grows to be about 12 inches long and weighs about 2 pounds. The bulk of the Sugar produced throughout the world, remaining after domestic consumption, is sold internationally under special protective agreements. Of the available supply after domestic consumption, roughly 20% is available to be sold on the free market. It is this “free market” Sugar which is referred to as World Sugar. The trade in World Sugar is monitored by the International Sugar Organization (ISO), a voluntary alliance of sugar importing and exporting nations. The number 11 denoted on the end refers to the grade that is accepted at par value for the contract. Less and more refined grades of Sugar are deliverable at discounts and premiums to the futures final settlement price.

Supply / Production Considerations
The major producers of sugarcane are Brazil, India, and Cuba. The United States is the only country which grows both sugarcane and sugar beets, with cane production centered in Hawaii, Louisiana and Florida, while beet production is centered in California and Minnesota. Sugar cane typically yields several crops, which are normally harvested fall through spring. This type of Sugar source accounts for about 60 percent of the world's production of Sugar. 
Sugar beets are typically planted in the early spring, and harvested before the first winter freeze. The major beet-growing region is in the European Union, followed by China, Thailand, and Australia. The United States only accounts for roughly about 10% of the world’s Sugar production, with most of that in cane form.

Demand / Consumption Considerations
The demand for World Sugar is tied to many long-term, macro population and political trends. Per capita income levels and population growth rates are two very important influences on the price of World Sugar. Politics also play an important role in determining the price of World Sugar. For example, the United States imports Sugar on a USDA import quota system, typically paying domestic sugar prices (usually higher than World Sugar prices). Changes to import and export quotas can have enormous effect on the demand for imported Sugar.  Changes to the method of payment for Sugar from importer to exporter can also have dramatic effects on the demand for Sugar.

An increase in income levels of developing nations, such as in the Far East and South America, has increased the demand for sugar. The availability of alternative sweeteners, such as Nutra Sweet and corn syrup, has dampened the demand for Sugar slightly.

The major Sugar importing nations are the United States, Great Britain, Germany and the former Soviet States.

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