Sugar prices surged on Monday, with July NY world sugar closing up 2.27%, marking a one-month high. This rally is largely driven by a significant increase in gasoline prices, which boosts ethanol prices and encourages sugar mills to divert cane from sugar production to ethanol. This shift is expected to tighten global sugar supplies, as highlighted by Green Pool Commodity Specialists’ revised estimate of a 4.3 million metric ton deficit for the 2026/27 season, up from 1.66 million metric tons.
The implications for the sugar market are substantial. Brazil’s sugar production is projected to decline as mills prioritize ethanol, with recent reports indicating an 11.9% year-over-year drop in sugar output for the first half of April. Additionally, supply disruptions from the closure of the Strait of Hormuz further constrain refined sugar output, intensifying concerns over future sugar availability.
Market professionals should note that the tightening supply outlook and rising ethanol production could sustain upward pressure on sugar prices in the near term, making it essential to monitor these developments closely for trading and investment strategies.
Source: nasdaq.com