Sugar prices surged on Thursday, with May NY world sugar #11 closing up 2.06% to reach a 5.5-month high, while May London ICE white sugar #5 rose 1.23%. This rally was largely driven by a 4% increase in crude oil prices, which bolstered ethanol values and may incentivize sugar mills to shift production away from sugar towards ethanol. Additionally, supply disruptions from the closure of the Strait of Hormuz have constrained refined sugar output, impacting approximately 6% of global sugar trade.

Despite recent price gains, analysts remain cautious, forecasting a significant global sugar surplus in upcoming crop years, with estimates ranging from 2.74 MMT to 3.4 MMT. Increased production in major sugar-producing countries like India and Brazil is expected to contribute to this surplus, although Brazil’s recent production decline may offer some temporary support for prices.

Market participants should closely monitor the evolving supply dynamics, particularly the potential for increased Indian sugar exports, which could further pressure sugar prices in the medium term.

Source: nasdaq.com