Sugar

Sugar trades as two contracts on two exchanges, one for each stage of the same product. Raw sugar is the unrefined output of cane mills, the brown crystalline feedstock that refineries turn into white sugar, and it trades as the ICE Sugar No. 11 in New York: 112,000 pounds quoted in cents per pound. White sugar is the refined, food-grade product, and it trades as the ICE White Sugar No. 5 in London: 50-tonne lots quoted in dollars per tonne, the former LIFFE contract absorbed into ICE Futures Europe in 2013. The spread between them is the whole point. The white premium, London whites minus New York raws adjusted for the 0.92 polarization factor, is the refiner's gross margin, and it tells you instantly whether the world is short of refining capacity or short of cane. Raws price the roughly 180 million tonnes the world produces; whites price the roughly 65 million tonnes of refined sugar that cross borders each year.

The numbers are worth explaining, because they look like grades and are not. No. 11 does not describe the sugar; it is a serial number in a long series of contracts the New York exchange has listed since it began trading sugar in the early twentieth century, and 11 is simply the one that happened to become the world raw-sugar benchmark. The series is best seen in the American domestic contract, which ran in even numbers as it was revised: No. 10 became No. 12, No. 12 became No. 14 on July 1, 1985, and No. 14 was replaced by No. 16 in September 2008, each renumbering marking a materially changed contract. No. 11 sits between them because the world and domestic contracts shared one numbering sequence, the odd number for the free market and the even ones for the quota-protected US market. What contracts Nos. 1 through 10 were is not documented anywhere public; the exchange has never published the list, and the pre-1975 record sits in print archives rather than online, since sugar futures were not federally regulated until then. Anyone who tells you confidently what No. 8 was is guessing.

The London number is a different story again, and a name the exchange itself has quietly dropped. ICE does not call the London contract No. 5. Its official name is simply White Sugar futures, with the exchange root W. "No. 5" is inherited from the old London Commodity Exchange series, and the interesting part is that it refused to die: brokers, price reporting agencies and the trade press still write London No. 5 as a matter of course, so the name lives everywhere except on ICE's own product page. A contract designation can outlive the institution that issued it purely because the market finds it useful. London's numbering was a wholly separate series run by a different exchange, so the fact that the two benchmarks carry small numbers, 5 and 11, is coincidence and means nothing. The same habit runs through the other New York softs: cotton traded as No. 1 and No. 2 side by side from 1870 until No. 1 was discontinued, leaving today's Cotton No. 2, and orange juice acquired an FCOJ-2 in 1990. Cocoa, listed once in 1925 and never materially reissued, carries no number at all, which rather proves the rule.

None of which is what the market actually says. On a desk or in a broker note the two contracts are simply the raws and the whites, used as plain nouns: selling in the whites creates a drag on the raws. New York is the raws, London is the whites, and that is the whole vocabulary. The exchange may have retired the name No. 5, but the trade never did, and analysts and reporting agencies still write London No. 5 routinely. The spread between them is the white premium, quoted in dollars per tonne and, confusingly for a newcomer, often just called the arb. So a line like "Oct whites dropped into the mid-460s and the white premium haemorrhaged around $10" is a complete market report: refined sugar fell, and refining margins fell harder. Read the premium rather than either outright price and you learn which of the two things is short, cane or refining capacity.

Raw sugar is the larger and more speculative of the two. Brazil rules the export market: its Centre-South cane belt crushes more than 600 million tonnes of cane a season and supplies roughly 70 percent of globally traded raw sugar. The defining feature of the market is that Brazilian mills are dual-fuel factories. Every tonne of cane can become either sugar or hydrous ethanol for Brazil's flex-fuel car fleet, and mills adjust the production mix season by season. That makes Brazilian gasoline prices, Petrobras pricing policy, and ultimately crude oil a floor mechanism under world sugar: when ethanol pays better than sugar exports, the sugar supply shrinks.

The other half of the market is Asian policy. India is the world's second producer and a chronically unpredictable exporter, swinging between subsidized export surpluses and outright export bans, as in the restrictions it imposed from October 2023 while diverting cane to its own ethanol program. Thailand is the second-largest exporter; China and Indonesia are the big importers. Prices ran to a 12-year high around 28 cents per pound in late 2023 on Indian restrictions and a poor Thai crop, then fell by roughly half through 2025 as record Brazilian harvests and an Indian export return rebuilt the surplus. The No. 11 contract is 112,000 pounds (50 long tons), quoted in cents per pound, physically delivered free-on-board at ports in the producing country, one of the few FOB-origin delivery contracts in commodities, and its March, May, July, and October expiries can produce huge delivery tenders, frequently dominated by a single trade house. Those four months, with no September or December, make the October-March spread the one that straddles the year, and October is the cleaner expiry because the sugar tendered against it is overwhelmingly Brazilian. The October 2023 contract expired with almost three million tonnes delivered through the exchange, a record.

The 0.92 polarization factor that turns up in the white-premium calculation is not a market convention but contract arithmetic. Sugar is graded by polarization, or "pol", the sucrose purity measured by how the crystal rotates polarised light, and the No. 11 contract specifies raw centrifugal cane sugar of 96 degrees average polarization. The rulebook then prices every deviation on a published scale: a degree better, at 97, adds 1.00 percent to the notice price, 97 to 98 adds a further 1.25 percent, 98 to 99 another 1.50 percent, and above 99 the increments come in tenths of a degree; falling from 96 to 95 has historically deducted 5.50 percent. So purity is money, at a rate written into the rules rather than haggled over. A 2025 board amendment rewrites that scale from the March 2028 delivery month, dropping the below-96 deduction and lifting the damages threshold to 97 degrees.

That scale is why VHP, very high polarisation sugar, exists at all. Brazilian export raws typically run 99.0 to 99.49 pol, close to refined purity while remaining legally raw, which lets the seller collect the pol premium without paying for full refining or attracting the tariff treatment that refined sugar attracts at many borders. It is the workhorse grade of the world sugar trade, assessed by the reporting agencies out of Santos and Maceio, and it is the reason a cargo can be described as raw sugar and yet be very nearly white.

On the refined side, the map has shifted decisively toward destination and re-export refineries. Standalone toll refiners in Dubai, Saudi Arabia, and across Asia and Africa import raws from Brazil and sell whites regionally, competing with the direct white-sugar exports of India and Thailand when those countries allow them. When Indian export bans removed the largest source of direct whites from late 2023, the white premium blew out above $100 per tonne and refinery margins boomed, taking London whites to multi-year highs near $760 per tonne; record Brazilian raw supply and returning Indian exports compressed the premium again through 2025. The No. 5 is the quieter, more commercial half of the complex, with less speculative froth than New York and a user base of food manufacturers, refiners, and trade houses hedging actual cargoes. Watching the two contracts against each other separates a cane shortage, which lifts both, from a refining bottleneck, which lifts only whites.

All of this is cane sugar, but roughly a fifth of the world's sugar comes from a completely different plant, the sugar beet, a temperate root crop grown where cane cannot survive, across the EU, Russia, Ukraine, the United States, and Turkey. The global split is about 80 percent cane to 20 percent beet, and the chemistry is identical: fully refined sugar from either is essentially pure sucrose, indistinguishable in the bowl. The plant and the processing are what differ. Cane is a tropical grass that stores sugar in its stalk, crushed to a juice that is crystallized into raw sugar and then refined, which is why a raw-sugar market exists in the first place. Beet stores its sugar in the root, sliced and soaked in hot water to draw the sucrose out, and is processed straight to white sugar in one step, so there is no raw-beet-sugar market at all. One telling quirk: cane molasses is edible, the basis of brown sugar and rum, while beet molasses tastes foul to humans and goes to animal feed and fermentation. Cane dominates the 80/20 split for plain economics: it is a perennial tropical grass that ratoons (regrows after cutting for several years) and yields roughly double the sugar per hectare of beet at low tropical labour costs, so wherever cane grows it is the cheaper sugar. Beet survives mainly where cane cannot, in temperate Europe, Russia, and the northern US, and is sustained there by subsidy, tariff protection, and supply security rather than by out-competing cane, which is why the two crops split the world by latitude rather than fight head to head.

Sugar also has one of the longest histories of any crop. Sugarcane was domesticated in New Guinea around 8000 BC and carried west to India, where the craft of crystallizing cane juice into sugar developed around the Gupta era, roughly 350 AD; the Sanskrit word khanda, a piece of crystallized sugar, passed through Persian and Arabic to become the English word candy. Arab agriculture spread cane across the Middle East and Mediterranean, Crusaders met it in the Levant, and from the 1400s the Atlantic plantation system, on Madeira and then Brazil and the Caribbean, turned sugar from a rare spice into a mass commodity, built on the labor of enslaved Africans, the brutal engine of the early sugar economy. Beet sugar came much later, out of chemistry: the German Andreas Marggraf identified sucrose in beets in 1747, his student Franz Achard opened the first beet-sugar factory in 1801, and Napoleon's blockade of the continent after 1806, which cut Europe off from Caribbean cane, drove France and Germany to build the beet industry that survives today.

Before cane sugar reached them, people sweetened food with whatever their region offered, and the near-universal answer was honey, used for at least ten thousand years and the dominant sweetener of the ancient world. Around it sat regional alternatives: dates and date syrup in Mesopotamia and the Middle East, boiled-down grape must (the Roman sapa), figs and carob, maple syrup among the indigenous peoples of North America, and agave in Mesoamerica. Sugar displaced nearly all of them. In medieval Europe it was a rare luxury sold by apothecaries as a spice and a medicine, priced beside cinnamon and pepper, and only the plantation boom made it cheap enough to become an everyday food. What pulled it into daily life was the arrival of tea, coffee, and chocolate, bitter drinks that Europeans chose to sweeten; as the historian Sidney Mintz argued in Sweetness and Power, sweetened tea became cheap fuel for the industrial working class. Consumption then exploded: England went from about four pounds a head in 1700 to ninety by 1900, and rich countries now run near or above a hundred pounds of caloric sweetener per person a year.

That same cheapness and ease of access put sugar at the center of the modern diet-and-weight debate. The cheaper it became, the more of it ended up in everything, and from the 1970s and 1980s in the United States high-fructose corn syrup, made cheap by corn subsidies and sugar import quotas, flooded into soft drinks and processed food, with Coca-Cola and Pepsi switching to it around 1980. The single largest source of added sugar today is sugar-sweetened beverages, liquid calories that do little to blunt hunger. Health authorities now advise keeping free sugars under ten percent of calories, ideally under five, roughly 25 grams or six teaspoons a day, while a typical American takes in closer to thirteen percent. The scientific consensus is that cheap, abundant added sugar, above all in drinks, has been a genuine contributor to rising obesity and type 2 diabetes, though the culprit is best understood as total liquid sugar rather than high-fructose corn syrup as a uniquely toxic ingredient, since it is chemically close to ordinary sugar; corn syrup was simply the mechanism that made sugar so cheap.