Sugar prices have risen by an average of over 60% in the European Union, highlighting the overall increase in food prices over the past year as reported by Eurostat.
In terms of highest increases on a country-specific basis, Czechia was at the top of the heap with a 98% jump in sugar prices. Estonia and Poland rounded out the top three with prices rising 97% and 82%, respectively.
“In March 2023, the highest increases in annual inflation for sugar were recorded in Czechia (98%), Estonia (97%), Poland (82%), Germany (72%), and Latvia (70%), while smaller but still considerable increases were registered in Hungary (17%), followed by Luxembourg (19%), Belgium (35%), Bulgaria (36%) and Ireland (37%),” the report said further.
Sugar prices are not an isolated issue. According to the Wall Street Journal, prices have also risen exponentially in the U.S. — raw cane sugar futures trading saw sugar prices jump to their highest level since March 2012. A confluence of global factors have contributed to lower production, pushing the prices higher while demand continues.
“A lot of things have gone wrong on the production side,” said Peter de Klerk, senior economist at the International Sugar Organization.
Bad weather in India, China, and Thailand has been an thorn in the side of sugar production. With China re-opening its doors following a rise in COVID-19 cases, demand only increased while supply suffered.
“The upswing comes as many other commodities have held broadly steady or fallen this year,” the Wall Street Journal noted a couple of weeks ago. “Prices for wheat, corn, nickel and natural gas are all lower, while Brent crude oil is close to flat.”
The Only Way to Get ETF Exposure to Sugar
Investors looking to get in on the sugar price action can do so via exchange traded funds (ETFs) that offer exposure without having to open futures positions. In particular, investors can look at the (CANE ) — the only sugar ETF on the market.
The fund seeks to have the daily changes in the NAV of the fund’s shares reflect the daily changes in the sugar market for future delivery, as measured by a weighted average of the closing settlement prices for three futures contracts for No. 11 sugar that are traded on the ICE Futures US. The fund seeks to achieve its investment objective by investing under normal market conditions in Benchmark Component Futures Contracts.
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