I asked in a Barchart article if the price consolidation of sugar would end on May 2, 2025. I concluded:
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.
July sugar futures were at the 17.05 cents level on May 2 and were around the 16.00 cents per pound level on June 18, in a bearish trend. Events in the Middle East could lead to a recovery in sugar due to their correlation with oil prices.
The bearish trend continues
The nearby continuous sugar futures contract reached a high of 20.19 cents per pound on February 6, 2025, marking the peak for 2025.
The chart shows a pattern of lower highs and lower lows, which sent the July sugar futures to a 15.80 cents per pound low on June 18. At below 16 cents, world sugar futures remain in a bearish trend just above the most recent low.
Levels to watch in the sugar futures market
The monthly chart highlights the bearish trend since November 2023, when the price reached a multi-year high of 28.14 cents per pound.
The monthly chart illustrates that critical technical support for world sugar futures is now at the March 2021 low of 14.67 cents. Resistance is at the September 2024 high of 23.64 cents. At around 16 cents, sugar futures remain in a longer-term bearish trend.
The Middle East- Crude oil and gasoline prices could lift sugar prices
While the United States refines corn into ethanol for blending with gasoline, Brazil, the world’s leading sugarcane producer, processes the sweet commodity into biofuel. Therefore, higher crude oil and gasoline prices could put upward pressure on world sugar futures as increased energy demand limits Brazil’s sugar exports.
Over the same period, nearby NYMEX gasoline futures prices rallied 24% from $1.8720 on April 9 to $2.3208 per gallon wholesale on June 18.
The turmoil in the Middle East could send crude oil and gasoline prices substantially higher over the coming days, weeks, and months. Higher energy prices would likely cause an increase in Brazilian domestic sugar consumption, reducing exports and putting upward pressure on prices. Therefore, higher crude oil and gasoline are not bearish for the world sugar futures.
Tight stops on long positions in the current environment
Given the price action in cocoa, coffee, and frozen concentrated orange juice futures over the past months, world sugar could be close to a significant low. The soft commodities sector led the raw materials asset class in 2023 and 2024, with prices of cocoa, coffee, and FCOJ reaching new record highs. While sugar and cotton futures have lagged, they still offer value in the soft commodities sector as of June 2025.
Since sugar’s trend remains bearish, any long risk positions require tight stops. Bullish market participants in the world sugar arena should be willing to accept short-term small losses in the quest for greater long-term gains when the bearish price action forms a bottom and sugar’s price recovers.
CANE is a sugar ETF product
The most direct route for a risk position in world sugar is the futures and futures options on the Intercontinental Exchange. The world sugar futures market is liquid, with open interest, the total number of open long and short positions, over the 880,000 contract level.
Each sugar futures contract contains 112,000 pounds. At 16 cents per pound, the contract value is $17,920. The original margin of $1,218 per contract means that market participants can control $17,920 worth of sugar for a 6.8% down payment. The exchange requires a maintenance margin if equity drops below $1,108 per contract.
The Teucrium Sugar ETF product (CANE) owns three sugar futures contracts, excluding the nearby contract to minimize roll risks. At $10.91 per share, CANE had over $9.87 million in assets under management and trades an average of 29,899 shares daily. CANE charges a 0.22% management fee.
The chart shows that CANE has followed the same bearish trend as nearby sugar futures in 2025, as the ETF does an excellent job tracking the sweet commodity’s price action.
Sugar futures could offer value at around the 16 cents per pound level in mid-June. However, long risk positions require tight stops as the bearish trend remains firmly intact.
