In my July 11, 2025, Q2 Barchart wrap-up on the soft commodities sector, I concluded with the following:
Sugar and cotton futures remain under pressure, making lower highs and lower lows. However, the world sugar and cotton futures offer more value than the other softs, as prices are nowhere near historical highs. As the soft commodities are now in the second half of 2025, underperformance compared to the other commodity sectors continues, following a period in which softs led the asset class in 2023 and 2024. Commodity cyclicality is a powerful force. If sugar and cotton prices continue to reach lower lows, they could be excellent candidates for recovery, as low prices cause production and inventories to decline, leading to increased consumption and significant price bottoms.
Nearby ICE world sugar futures declined 17.92% in the second quarter of 2025, and were down 19.73% over the first half of 2025, settling at 15.48 cents per pound on June 30, 2025.
World sugar futures for October delivery were higher in early August, but they are not running away on the upside.
World sugar #11 futures have been in a bearish trend since early 2025.
The year-to-date daily chart of nearby ICE world sugar #11 futures highlights the pattern of lower highs and lower lows from the February 6, 2025, high of 20.19 to the July 2, 2025, low of 15.44 cents per pound.
The longer-term five-year monthly chart illustrates the bearish pattern since the November 2023 high of 28.14 cents per pound. The November 2023 peak was the highest price for world sugar futures since October 2011.
The long-term quarterly chart highlights sugar’s price action for nearly six and a half decades.
The quarterly chart shows sugar futures reached the record high of 66 cents per pound way back in 1974. World sugar prices rose to lower highs of 44.80 cents per pound in 1980, 36.08 cents per pound in 2011. Sugar has been in a bearish trend since 1974, making lower highs. However, the sweet commodity has made higher lows since the 1967 1.23 cents per pound bottom.
Sugar production comes from two sources, sugarcane and sugar beets. Sugarcane output depends on tropical growing conditions.
Source: atlasbig.com
Brazil is the world’s leading sugarcane producer. Sugar beets can grow in more temperate climates.
Source: nationmaster.com
The chart highlights that Russia leads the world in sugar beet output, with France and Germany second and third.
Many countries subsidize domestic sugar production due to the historical price volatility of the soft commodity to ensure supplies, as sugar is a critical ingredient in many food products. While the nearby price of world sugar #11 prices is around 16.60 cents per pound in early August 2025, the U.S. subsidized price is more than twice that level.
The chart shows that U.S. government-subsidized sugar #16 futures were trading at 38 cents per pound in early August 2025. Many other sugar-producing countries subsidize their domestic output.
Brazil is the world’s leading sugar-exporting country.
Source: worldstopexports.com
The chart highlights that Brazil exports nearly half of the world’s sugar, and almost eight times the amount of second-place Thailand.
In the United States, the world’s leading corn producer and exporter, the coarse grain is the primary ingredient in ethanol production. In Brazil, sugarcane is processed into biofuel. Therefore, sugar’s price can be sensitive to crude oil and oil product prices. Rising oil prices can cause fewer Brazilian sugar exports as more is required for domestic fuel production.
The five-year monthly NYMEX crude oil futures chart displays the bearish trend since the March 2022 high, and the range trading between below $60 and under $80 per barrel since September 2024. The price action in the crude oil market has not supported higher sugar prices over the past year, as Brazilian production and exports have satisfied Brazilian and worldwide demand.
ICE sugar futures for October 2025 delivery is the sweet commodity’s current active month.
The daily three-month chart shows that technical support is at the July 2 low of 15.44 cents, with technical resistance levels at the July 18 high of 17.02 cents, and the May 14, 2025, high of 18.46 cents per pound. At the 16.30 level, world sugar futures prices are consolidating not far above the early July low.
The most direct route for a risk position in sugar is the highly liquid world sugar #11 futures market. Each sugar futures contract contains 112,000 pounds. At 16.30 cents per pound, the value is $18,256. The original margin requirement is $1,071 or 5.87% of the contract value. When equity drops below $974 per contract, the ICE exchange requires maintenance margin. Futures are leveraged instruments, as a market participant can control sugar futures contracts for less than a 6% down payment.
The Teucrium Sugar ETF (CANE) provides an alternative to futures as it owns three actively traded ICE sugar futures contracts, excluding the nearby contract. CANE’s composition reduces volatility by eliminating roll risks for the nearby contract. Still, it also lowers the upside potential as the most speculative activity that can drive prices occurs in the nearby contract. Therefore, CANE tends to outperform the nearby contract during downside price action but underperform the nearby contract during rallies. At $10.90 per share, CANE had assets of $13.068 million and trades an average of 61,999 shares daily and charges a 0.22% management fee.
Sugar’s bearish trend continues in early August 2025. If the sugar futures price can power through the 17 and 18.50 cents per pound level, the sweet commodity could get sweeter.
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. This article was originally published on Barchart.com
