Will Sugar’s Price Consolidation End?

World sugar futures on the Intercontinental Exchange moved 6.41% lower in 2024 and declined 2.08% in Q1 2025, closing at the 18.86 cents per pound level on March 31, 2025. In my Q1 Barchart report on the soft commodities, I concluded:The only soft commodity with an ETF is world sugar. The Teucrium Sugar ETF (CANE) tracks the price action in three actively traded ICE world sugar futures contracts, excluding the nearby contract, to minimize roll risks. Since most volatility tends to occur in the nearby contract, CANE tends to underperform the nearby sugar futures contract, where the most speculative activity occurs on the upside and tends to outperform when the sugar price declines. July world sugar futures were lower than the Q1 closing level in early May 2025 and remain in a consolidated range with a bearish bias. Not much price action in the sugar futures arena World sugar futures on the Intercontinental Exchange have been stuck in a narrow trading range in 2025. The daily four-month nearby futures chart shows that the sugar futures have traded as low as 16.97 and as high as 20.19 cents per pound since the beginning of 2025. The sugar futures were at their low of the year in early May. Open interest fell as May futures rolled to JulyOpen interest measures the total number of open long and short positions in a futures market and is a liquidity metric. Sugar has the highest open interest in the soft commodities sector. Meanwhile, open interest in the sugar futures market has declined from nearly 1.03 million contracts in mid-February 2025 to below 795,000 at the beginning of May. The latest drop from over 916,000 contracts in early April to the current level occurred because of the rollover of May contracts to the next active futures month, July, and due to long liquidation.The lack of any significant bullish trend has caused interest in sugar futures to decline. While coffee, cocoa, and FCOJ have risen to new all-time highs over the past weeks and months, world sugar remains substantially below its 1974 66.0 cents per pound record peak. Brazilian weather and traditional energy prices are critical for sugar pricesSugar is a unique commodity. Many governments worldwide subsidize producers so that shortages do not materialize. Therefore, sugar prices in domestic markets can be far higher than world prices. The weekly nearby chart of Sugar #16 for July delivery, the U.S. subsidized sugar price, shows that at 37.30 cents per pound, the sweet commodity in the U.S. commands an over 100% premium to world sugar prices at around 17 cents per pound. Brazil is the leading producer and exporter of world free-market sugar. Therefore, Brazil’s weather conditions and crop diseases can influence world sugar prices. Moreover, while the U.S. produces ethanol from corn, Brazil’s biofuel comes from sugar. Therefore, sugar can be sensitive to global crude oil prices. The monthly WTI NYMEX crude oil futures chart illustrates the bearish pattern of lower highs and lower lows, putting some pressure on sugar prices. The bottom line is that ample Brazilian production and falling oil prices have weighed on world sugar futures. Levels to watch in the sugar futures arenaSoft commodities have been on bullish fire over the past years, with cocoa, coffee, and FCOJ rising to lofty levels and new record highs. However, sugar has not followed the other bullish softs. The five-year continuous world sugar futures chart shows that the decline through 17.20 cents per pound in late April as technical support at the August 2022 17.20 low gave way. Critical technical resistance is at the September 2024 23.64 high and the November 2023 28.14 high. The next support level is at the March 2021 14.67 per pound low. The forward sugar curve and CANE ETF productThe most direct routes for a risk position in the world sugar arena are the futures and futures options on the Intercontinental Exchange. Each futures contract contains 112,000 pounds. At $17.05, the contract value is $19,096. The original margin of $1,317 per contract means that market participants can control over $19,000 worth of sugar futures with a 6.9% downpayment. The ICE exchange requires maintenance margin if equity drops below $1,198 per contract. The Teucrium Sugar ETF (CANE) owns three actively traded ICE world sugar futures contracts. At $11.22 per share, CANE had over $10.15 million in assets under management. CANE trades an average of 47,162 shares daily and charges a 0.22% management fee. The world sugar futures curve shows mostly flat pricing out to March 2028. Meanwhile, producers have not planted the crop that will determine supplies in three years. Source: Teucrium.com While July sugar futures are currently the actively traded month, the CANE ETF owns three deferred contracts to reduce and mitigate futures rollover risks. Since the most speculative activity occurs in the nearby and active month, CANE tends to underperform the actively traded contract on the upside, but it often outperforms the nearby contract when prices decline. CANE is a proxy for sugar futures. Given the price action in Arabica coffee, cocoa, and FCOJ futures over the past months, sugar could offer value. Deferred sugar futures at prices lower than the nearby contract do not reflect the potential for supply issues in the world free-market sugar market. On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.