Sugarcane, native to South and Southeast Asia, has been used since ancient times to sweeten food and drinks. It was a relatively obscure plant until the Middle Ages when people figured out how to refine, store, and trade it. Sugar eventually replaced honey as the world’s most popular sweetening agent. Corn syrup is now more common in processed foods, but sugar remains a perennial favorite. And it’s usually very affordable – but not recently.

Sugar prices rose dramatically in 2009 based on short global supply. Weather issues in Brazil, the largest producer, coupled with higher demand in India caused global sugar prices to rise to an all-time high in February 2010 – nearly 30 cents per pound. That’s one reason your favorite cake at the local bakery was more expensive, but prices eased earlier this year thanks to improved supply and slackened demand. Sugar may have fallen from its recent highs, but the question remains:

Where is sugar going now?

Back in the spring, short-term trends were downward. But sugar established a bottom in May and June. Since then, prices have strengthened steadily. A gentle uptrend is now in effect. Chartists would point to how prices broke above a retracement bar on the weekly charts – a bullish indicator suggesting more upward momentum. One technical analyst thinks the sweetener will rise 10% in the coming months based on a Fibonacci retracement. The technicians may be wrong, but global crops haven’t improved dramatically enough to indicate further price declines. We like sugar’s chances at rising again.

Traditionally, commodities like sugar have been traded at the futures exchanges. The main contract for sugar futures is Sugar No. 11, sold in New York at the Intercontinental Exchange (ICE). ICE plays host to other unique commodities like Sugar No. 16, Cotton No. 2, and Coffee – but Chicago is still the futures trading capital of the world. Fortunately, you no longer have to expect delivery of truckloads of sugar to your front lawn while trading the commodity. These days you can buy an exchange traded product (ETP) that mirrors sugar prices on the exchanges.

In January, we recommended Brazilian sugar producer Cosan Ltd (CZZ). Since then, CZZ is more than 16% despite economic challenges in both North and South America. We think sugar is heading up again. Instead of locking in on one stock, a better bet might be with an ETP. Right now, the only sugar ETP available is iPath DJ-UBS Sugar TR Sub-Index ETN (SGG).

Technically, SGG is not an ETF – it’s an ETN, or exchange traded note. As such, it carries the credit risk of the issuer, in this case Barclays. Barclays iPath ETNs are described as “senior, unsecured, unsubordinated debt securities issued by Barclays Bank PLC.” Aside from the risk of Barclay’s default, SGG is a far-superior product for most investors. To profit from the global bounce in sugar prices, go with SGG.