Sugar price surges 30% in five weeks to highest level since April 2025

Sugar prices have surged nearly 30% over the past five weeks, hitting 18.15 cents per pound on Thursday, a level not seen since April 2025.

The uptrend began on August 3 at 13.97 cents. Three supply-side disruptions have fueled the rally, amplified by speculative fund activity.

What Is Causing the Sugar Price to Surge

In Brazil, mills have diverted cane from sugar production to ethanol. With Brent crude around $94 per barrel, fuel becomes more profitable, and the Hormuz closure maintains high energy prices. Mills began the season with less than half of their output hedged, prompting a swift shift. Center-South sugar output dropped 26.3% year-on-year in June, according to UNICA.

India has become a buyer. After banning exports in May, New Delhi permitted 1 million tonnes of duty-free raw imports until October 31. This marks its first major purchase since the 2017-18 season. Domestic prices reached a 16-year high, prompting the government to limit bulk buyers to 15 days of inventory.

Analysts have also revised their global outlook. Green Pool forecasts a deficit of 3.2 million tonnes for 2026/27, and StoneX predicts 1.7 million tonnes. In June, both Covrig Analytics and Czarnikow had anticipated surpluses.

Czarnikow now expects a second deficit in 2027/28. A strong El Niño poses risks to cane crops in India and Thailand, a danger highlighted by Goldman in June.

Technical Analysis Points to 19.48 Cents for Sugar

The weekly chart shows a retracement of the decline from 23.38 cents. Sugar moved above the 0.236 Fibonacci retracement at 15.58 cents in August, making that level a potential support zone.

The price is currently at the 0.5 retracement level of 18.28 cents. Thursday's session reached 18.58 cents before pulling back, indicating resistance held on the first test.

A weekly close above 18.28 cents would open the path to the 0.618 retracement at 19.48 cents. This level also aligns with the falling 200-week moving average, strengthening its resistance. The 0.786 retracement at 21.20 cents is above that.

On the downside, initial support is at the 0.382 retracement of 17.08 cents. A deeper pullback would revisit 15.58 cents.

Volume has increased significantly over the last three weeks, indicating strong conviction behind the breakout. The weekly RSI is at its highest since April 2023. Momentum currently supports the commodities bulls.

Speculative traders held 207,100 net long contracts in late August, a two-year high, after being net short in May. However, such crowded positioning could amplify any downturn.