Sugar Trading Strategy: Backtest, Rules, Settings, Performance and Example

Extracted from sugarcane and sugar beet plants, sugar is a soluble and sweet-tasting carbohydrate used to sweeten food products. Sugar futures are actively traded on commodity exchanges, such as CME and ICE. You can use sugar futures contracts to speculate on the price of sugar, diversify your portfolio in the soft commodity market, or hedge your exposure in the market. Whichever reason you trade the sugar contract, you need a sugar futures trading strategy.

A sugar trading strategy refers to the method or technique you can use to trade sugar contracts profitably, and this would include technical and fundamental analyses of the sugar futures market. Sugar futures is a derivative contract that represents a tradable, legally binding agreement to receive or deliver the specified quantity of sugar on a future date, at a pre-agreed price.

The contract trades on both ICE and CME, and depending on the exchange, the settlement on expiry may involve the physical delivery of the specified quantity and quality of sugar.

In this post, we answer some questions about the sugar futures strategy. After explaining the basics, we show you an example of a backtested trading strategy.