In my Barchart January recap of the soft commodities sector in Q4 and where they are heading in 2024, I concluded, “Brazilian weather pushed Arabica coffee and orange prices through the roof, but it has not done the same for world sugar. Brazil is the leading producer and exporter of sugarcane. Time will tell if sugar futures join coffee, cocoa, and FCOJ on the upside in 2025.”
March world sugar futures were at the 18.96 cents per pound level on January 13 and were higher in February, above 19.40 cents per pound.
Sugar’s trend has been higher since the 2020 low
Coffee, cocoa, and FCOJ futures have soared to new all-time highs over the past weeks and months, but world sugar futures have not followed. However, sugar has remained in a bullish trend since the 2020 low.
The monthly continuous world sugar futures chart highlights that sugar futures have been in a bullish trend since the April 2020 9.21 cents per pound low. The futures reached a 28.14 high in November 2023, but they ran out of upside steam. The most recent 17.57 low held above the August 2024 17.52 technical support level.
Sugar futures reached the highest price since 2011 in 2023 before correcting
The long-term continuous world sugar futures change illustrates the soft commodity’s price history.
The quarterly continuous contract chart illustrates sugar’s lower highs since the 1974 66 cents record peak. Sugar futures reached 44.80 in 1980, 36.08 in 2011, and 28.14 in 2023. While the trend from 2020 is bullish, the path of least resistance since the 1974 peak remains bearish.
The most recent high rose to the highest price in a dozen years, and sugar futures have held above 17 cents since 2021.
Technical levels to watch in the sugar futures market
Sugar futures are the most liquid of the soft commodities, with the highest open interest and volume levels. Open interest is the total number of open long and short positions in the sugar futures market. Sugar futures have been volatile over the past three years but have held above 17 cents per pound.
The three-year continuous futures chart shows that technical support is at the August 2024 17.52 low, with technical resistance at the September 2024 23.64 cents per pound high. Above there, the highest price since 2011 at 28.14 cents is the upside technical target.
The case for higher sugar prices
The world’s leading sugar-producing countries are:
The chart highlights that Brazil led the world in sugar output in 2023/2024. Adverse weather conditions in Brazil pushed two other soft commodities, Arabica coffee beans and frozen concentrated orange juice futures, to record highs over the past weeks and months. Cocoa futures also rose to a new record high because of adverse weather conditions in West Africa, which impacted supplies.
Poor weather in Brazil could impact the sugarcane crop over the coming weeks and months.
Another factor that could support sugar prices is the potential for tariffs that distort commodity prices under the Trump administration. Finally, sugar’s trend since 2020 has been higher, with the soft commodity recently holding above the first technical resistance level and moving back over the 19 cents per pound level in February 2025.
Sugar is the only soft commodity with a liquid ETF product
The most direct routes for a risk position in world sugar are futures and futures options in the Intercontinental Exchange. Each ICE contract contains 112,000 pounds of sugar. At 19.50 cents per pound, the contract value is $21,840. The original and maintenance margin levels are $1,317 and $1,198, respectively. A market participant can control $21,840 worth of sugar for a 6% down payment, with variation margin due if equity drops below $1,198.
Sugar is the only soft commodity with an ETR product that tracks prices. The Teucrium Sugar ETF (CANE) invests in three actively traded sugar futures contracts, excluding the nearby contract, to minimize roll risks. At $11.49 per share, CANE had $13.90 million in assets under management. CANE trades an average of nearly 37,600 shares daily and charges a 0.22% management fee.
If sugar follows cocoa, coffee, and FCOJ in the soft commodities sector, the recent price action could be a consolidation period that leads to higher prices and a challenge of the 2023 peak at over 28 cents per pound. Brazil’s weather and sugarcane output are the most significant factors in the path of least resistance of the most liquid soft commodity. Time will tell if the sugar futures market holds the 17.52 support level, but the recent price action suggests it is a significant bottom for the sweet commodity.
