Sugar 3by2

Sugar breaks higher as tightening supply catches shorts off guard

Commodities 5 minutes to read
Sugar futures in New York have pushed above 17 cents/lb, reaching a level that has capped the upside on two previous occasions during the past year. Nine successive sessions of gains - the longest winning streak since January 2021 - have lifted prices by around 18%, driven by mounting concerns about tightening global supplies.

The supply outlook is becoming increasingly supportive. European sugar production is expected to fall to a decade low, while El Niño-related weather risks threaten cane output in India and Thailand, two of the world's largest producers alongside Brazil. Any meaningful deterioration in Asian crops would leave the market increasingly dependent on Brazilian supply.

One caveat is the shifting economics between sugar and ethanol in Brazil. The recent rally has pushed sugar to a sizeable premium over ethanol, strengthening the incentive for Brazilian mills to maximise sugar production rather than divert cane toward biofuel. That flexibility could eventually provide a supply response and limit the upside if current price strength persists.

Positioning has added fuel to the rally. Just before prices accelerated last week, speculators had already cut their net short position in New York sugar futures by around 30% to 77,800 contracts. With the market subsequently breaking above its long-term downtrend and the 200-day moving average, further short covering appears to have contributed to the latest surge.

Attention now turns to the 17-cent area. A sustained break above this resistance zone would strengthen the technical picture further, while failure to hold the breakout could leave the market vulnerable to profit taking as the short covering squeeze fades, particularly if Brazil responds to the improved sugar-production economics. 
12 sugar
Sugar breaking higher, partly driven by short covering from hedge funds - Source: Bloomberg & Saxo
This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
Related articles/content             
12 August 2026: Oil gyrates on Hormuz headlines as depleted inventories and tight distillates raise the stakes
11 August 2026: Gold and silver rebound as buyers return but the real test lies ahead
10 August 2026: COT on forex and commodities - Week to 4 August 2026
17 July 2026: Commodities weekly war weather and backwardation drive returns
16 July 2026: Wheat surges as war weather and short covering collide
15 July 2026: Is gold beginning to look beyond inflation
14 July 2026: Gulf tensions and short covering drive energy higher amid renewed supply shock fears
13 July 2026: COT on forex and commodities - Week to 7 July 2026
10 July 2026: Commodities stabilise supported by fuel and weather risks
8 July 2026: Oil jumps as fragile Iran ceasefire unravels
7 July 2026: COT update Elevated dollar and rate bets build as commodity selling eases
6 July 2026: From liquidation to consolidation precious metals seek a floor
3 July 2026: Commodities steady as lower inflation risks and softer jobs data calm markets
2 July 2026: Soft commodities rebound as weather risks and supply fears return
1 July 2026: Tour de France the 7 kg commodity basket behind the worlds fastest bikes
30 June 2026: Grains await USDA reality check after fund-driven round trip
29 June 2026: COT Crowded positioning raises the risk of sharp countertrend moves
26 June 2026: Commodities weekly June reset as peace hopes hawkish Fed and fund liquidation hit crowded longs
25 June 2026: Gold and silver slide as dollar strength fuels another round of liquidation
24 June 2026: Oil prices reset as stranded Gulf barrels head for market
23 June 2026: Metals struggle as markets price peak hawkishness not peak demand
18 June 2026: Weather risk returns as El Nino threatens crops grids and mines
17 June 2026: Precious metals steady as oil-driven inflation fears fade
16 June 2026: Oil retreats as peace hopes rise but depleted inventories may limit the downside
15 June 2026: COT on forex and commodities - Week to 9 June
12 June 2026: Commodities slide as markets price a tentative path to peace
9 June 2026: Gold slips below 200-day average as inflation jobs and Fed risks bite
8 June 2026: COT on forex and commodities - Week to 2 June 2026
4 June 2026: Copper rally faces tariff roulette but fundamentals remain tight
1 June 2026: Gold fell again in May as Middle East crisis reshaped market focus
1 June 2026: COT on forex and commodities - Week to 26 May 2026
29 May 2026: Commodities weekly Energy retreat masks deeper supply concerns as metals shine
22 May 2026: Commodities weekly: Oil's grip on macro and markets remain firm
21 May 2026: Oil takes control of markets as diplomacy headlines collide with tightening supply
19 May 2026: Gold Near-term headwinds meet longer-term structural support
18 May 2026: COT on forex and commodities - Week to 12 May 2026
13 May 2026: Grains surge as USDA wheat shock meets biofuel-driven soy demand
12 May 2026: Silver breaks higher as investors rediscover its dual appeal
11 May 2026: COT on forex and commodities - Week to 5 May 2026
8 May 2026: Gold holds firm as central banks and investors look beyond price
3 May 2026: COT on forex and commodities - Week to 28 April 2026
1 May 2026: Commodities rally broadens in April as Middle East disruption tightens global supply chains


Educational resources:
A short guide to trading crude oil
The basics of trading wheat online
A short guide to trading gold
A short guide to trading copper
A short guide to trading silver
Gold, silver, and platinum: Are precious metals a safe haven investment?

Daily podcasts hosted by John J Hardy can be found here


More from the author             

Outrageous Predictions 2026

01 /

  • Executive Summary: Outrageous Predictions 2026

    Outrageous Predictions

    Executive Summary: Outrageous Predictions 2026

    Saxo Group

    Saxo Group

    Read Saxo's Outrageous Predictions for 2026, our latest batch of low probability, but high impact ev...
  • A Fortune 500 company names an AI model as CEO

    Outrageous Predictions

    A Fortune 500 company names an AI model as CEO

    Charu Chanana

    Chief Investment Strategist

    Can AI be trusted to take over in the boardroom? With the right algorithms and balanced human oversi...
  • Dollar dominance challenged by Beijing’s golden yuan

    Outrageous Predictions

    Dollar dominance challenged by Beijing’s golden yuan

    Charu Chanana

    Chief Investment Strategist

    Beijing does an end-run around the US dollar, setting up a framework for settling trade in a neutral...
  • Obesity drugs for everyone – even for pets

    Outrageous Predictions

    Obesity drugs for everyone – even for pets

    Jacob Falkencrone

    Global Head of Investment Strategy

    The availability of GLP-1 drugs in pill form makes them ubiquitous, shrinking waistlines, even for p...
  • Dumb AI triggers trillion-dollar clean-up

    Outrageous Predictions

    Dumb AI triggers trillion-dollar clean-up

    Jacob Falkencrone

    Global Head of Investment Strategy

    Agentic AI systems are deployed across all sectors, and after a solid start, mistakes trigger a tril...
  • Quantum leap Q-Day arrives early, crashing crypto and destabilizing world finance

    Outrageous Predictions

    Quantum leap Q-Day arrives early, crashing crypto and destabilizing world finance

    Neil Wilson

    Investor Content Strategist

    A quantum computer cracks today’s digital security, bringing enough chaos with it that Bitcoin crash...
  • SpaceX announces an IPO, supercharging extraterrestrial markets

    Outrageous Predictions

    SpaceX announces an IPO, supercharging extraterrestrial markets

    John J. Hardy

    Global Head of Macro Strategy

    Financial markets go into orbit, to the moon and beyond as SpaceX expands rocket launches by orders-...
  • Britain’s Great EU Backdoor Return

    Outrageous Predictions

    Britain’s Great EU Backdoor Return

    Neil Wilson

    Investor Content Strategist

    Faced with rolling fiscal, economic, trade and political crises the UK government sneaks back into t...
  • Taylor Swift-Kelce wedding spikes global growth

    Outrageous Predictions

    Taylor Swift-Kelce wedding spikes global growth

    John J. Hardy

    Global Head of Macro Strategy

    Next year’s most anticipated wedding inspires Gen Z to drop the doomscrolling and dial up the real w...
  • Despite concerns, U.S. 2026 mid-term elections proceed smoothly

    Outrageous Predictions

    Despite concerns, U.S. 2026 mid-term elections proceed smoothly

    John J. Hardy

    Global Head of Macro Strategy

    In spite of outstanding threats to the American democratic process, the US midterms come and go cord...

This content is marketing material. 

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Market Ltd. (SCML) provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice or a recommendation.

SCML content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

SCML partners with companies that provide compensation for promotional activities conducted on its platform. Some partners also pay retrocessions contingent on clients investing in products from those partners. 

While SCML receives compensation from these partnerships, all educational and research content remains focused on providing information to clients.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. SCML does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992