Sugar prices are on the rise, with May NY world sugar #11 (SBK26) increasing by 0.29% and August London ICE white sugar #5 (SWQ26) climbing 0.90%, reaching a two-week high. The uptick is largely driven by rising crude oil prices, which have surpassed a 1% gain, encouraging sugar mills to shift production from sugar to ethanol. Additionally, the Brazilian real’s strength against the dollar is limiting export activity from Brazil, further tightening global sugar supplies.

The USDA has forecasted a 3% year-over-year decline in Brazil’s sugar production for the 2026/27 season, attributing this to increased ethanol production from sugarcane. Recent estimates from Covrig Analytics and Czarnikow also suggest a significant reduction in the anticipated global sugar surplus, indicating a tightening market. This shift comes amid concerns over potential supply disruptions due to geopolitical tensions affecting trade routes.

Market professionals should note that the combination of reduced global supply forecasts and rising crude oil prices could sustain upward pressure on sugar prices in the near term, making it a critical area for monitoring trading strategies.

Source: nasdaq.com