Hi Is anyone here familiar with sugar futures trading? Specifically ICE #11 sugar vs DCE sugar white. Seems like sugar white in China is always at a huge premium and fluctuates wildly vs ICE, and the correlation is sometimes strong and sometimes quite poor.
if you think $14 sugar in USA must go up because they are paying $32 in China, or China will come down from $32 because they are only paying $14 in USA, I suppose that is a spread strategy. This topic as been discussed on both corn and beans USA vs China. The first thing to consider is the currency disparity. Americans throw around dollars like it is no big deal. Meanwhile in China they are bitching over what amounts to fractions of a penny. Americans waste more sugar in a week than most Chinese consume in a lifetime. Getting back to corn, the Chinese contracts are like micro minis traded in some currency with a decimal point and several figures behind it. You may make some money on the spread if you really know what you are doing, but it's all going to come down to Chinese demand. And if you can figure that out before you put on your spread, you might as well just bet outright.
I do. I made a typo above -- sugar is actually on Zhengzhou. Can trade on Dalian, Zhengzhou, and Shanghai. Only have colo in Shanghai, however. The refined on ICE barely trades. For instance, this Reuters article talks about doing the ICE-ZCE arbitrage in the night session as if its very obvious what the arbitrage is that should be done. http://www.reuters.com/article/china-zhengzhou-exchange-idUSL3N0TP2F420141205