Sugar prices continued their downward trend on Thursday, with July NY world sugar #11 closing down 1.82% and August London ICE white sugar #5 down 1.21%. This decline follows a significant drop in gasoline prices, which have fallen over 8% in the past three sessions, negatively impacting ethanol prices and prompting Brazilian sugar mills to shift production from ethanol back to sugar due to higher profitability. The recent bearish sentiment contrasts sharply with earlier optimism when sugar prices reached five-week highs amid concerns over global supply shortages.
The market dynamics are shifting, with analysts noting a potential reduction in global sugar supplies. Brazil’s sugar production is projected to decline by 0.5% for the 2026/27 season, as mills increasingly divert cane for ethanol production. Additionally, the ongoing closure of the Strait of Hormuz is constraining refined sugar output, further tightening supply.
For market professionals, the key takeaway is that while current sugar prices are under pressure, the long-term outlook may pivot towards tightening supplies, especially if ethanol production continues to gain favor in Brazil. This could create volatility and present trading opportunities in the sugar market.
Source: nasdaq.com