Sugar prices surged on Monday, with July NY world sugar #11 closing up 1.50% and August London ICE white sugar #5 rising 1.23%. The uptick is primarily driven by concerns over tighter global supplies, particularly as Citigroup forecasts Brazil’s 2026/27 sugar production to fall significantly below previous estimates due to mills prioritizing sugarcane for ethanol amid rising gasoline prices. Additionally, a potential strong El Niño could disrupt sugar production in major producing countries like India and Thailand.
This tightening supply scenario is compounded by the ongoing closure of the Strait of Hormuz, which has curtailed around 6% of the global sugar trade, further straining refined sugar output. Recent reports from various agricultural organizations indicate a shift in global sugar surplus estimates, now projecting smaller surpluses than previously anticipated, which supports the upward price movement.
For market professionals, the key takeaway is that the combination of reduced production forecasts and supply chain disruptions could sustain higher sugar prices in the near term, making it essential to monitor developments in Brazil and India closely.
Source: nasdaq.com