May sugar futures are experiencing a downturn, with NY world sugar #11 (SBK26) down 0.96% and London ICE white sugar #5 (SWK26) down 0.40%. This decline is largely attributed to a significant drop in crude oil prices, which fell over 7%, prompting long liquidation in sugar futures. Lower crude prices can diminish ethanol production, potentially leading sugar mills to shift focus towards increasing sugar output.

Despite this bearish trend, sugar prices are supported by supply disruptions caused by the closure of the Strait of Hormuz, which has impacted approximately 6% of global sugar trade. Analysts predict a global sugar surplus for the upcoming crop years, driven by increased production in key regions like India, Thailand, and Pakistan. India’s recent approval for additional sugar exports further complicates the market dynamics, with expectations of rising exports adding downward pressure on prices.

Market professionals should monitor the interplay between crude oil prices and sugar production forecasts, particularly from India, as these factors could significantly influence sugar futures in the near term.

Source: nasdaq.com