How white sugar is priced, and how to read an offer.

The benchmark for white sugar: ICE No. 5

ICE calls No. 5 the global benchmark for pricing physical white sugar. Its contract is FOB, so the buyer names the vessel and pays freight and insurance from the loading port.

The raw sugar benchmark: ICE No. 11

ICE Sugar No. 11 in New York is raw cane sugar of 96 degrees average polarisation, delivered in bulk, quoted in US cents per pound, in lots of 112,000 pounds. Its delivery months are January, March, May, July and October. To compare it with No. 5, convert it: a tonne is 2,204.62 pounds, so cents per pound multiplied by 22.0462 gives US dollars per tonne. More on raw sugar on the VHP page.

The white premium

The white premium is the difference between the white and the raw price, both in dollars per tonne. ICE describes it as a proxy for the cost of refining raw sugar, and USDA notes that refined prices exceed raw prices because of the cost of refining and storing. The International Sugar Organization calculates a nominal white premium from its two published prices, described below.

Where to see the benchmark yourself

• ICE. The No. 5 and No. 11 product pages show the contracts and their delivery months.
• International Sugar Organization. Publishes the ISA daily price, a simple average of the first three No. 11 positions, and the White Sugar Price Index, a simple average of the first two No. 5 positions.
• World Bank Pink Sheet. A free monthly series for “Sugar, World”, which is the ISA daily price for raw sugar, in dollars per kilogram. It has no white sugar series.
• IMF primary commodity prices. A monthly “Sugar, No. 11, World” series, also based on raw sugar.

The free monthly series are all raw sugar. For white sugar, use the ISO White Sugar Price Index or ICE No. 5 itself.

From FOB to your port

• The Incoterm. FOB names the port of loading; CFR and CIF name your port of destination. Under Refined Sugar Association rules, in a CFR or CIF contract the seller provides the freight.
• Insurance. Under Incoterms 2020, CIF defaults to the minimum cover of the Institute Cargo Clauses (C). Under Refined Sugar Association rules, cover is the invoice value plus 10% on the Institute Commodity Trades Clauses (A); the seller insures under CIF, the buyer under FOB and CFR.
• Bags. No. 5 assumes 50 kg bags. Other packing is a term of your own contract.
• Inspection. The certificate of weight, quality and packing is a document the buyer pays against; see what protects you if sugar arrives off-spec.
• Your letter of credit. Banks charge to issue a letter of credit; the US International Trade Administration says letters of credit can be relatively expensive because of bank charges. Ask your bank for its charges before you compare offers.

When the number itself is the warning

The International Chamber of Commerce has warned about suspect documents for sugar shipments where “the price suggested on the contracts was significantly below market prices”, and said the aim was possibly to swindle an advance payment from a buyer tempted by a low price. Its commercial crime service has reported the same pattern across commodities: goods offered well below market value, with fake documents. If an offer sits far under the No. 5 screen, ask why before anything else, and see how sugar fraud actually works.

What a real offer contains

• the grade and its specification;
• the Incoterm with a named port;
• quantity and packaging;
• the shipment period;
• the payment instrument;
• how long the offer is valid.