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Sugar’s Sweet Ride Could End in 12-Year Highs Like Cocoa

Published 12/09/2023, 09:41
  • Raw sugar is up four weeks in a row, gaining 10% and hitting 5-month highs
  • Supply woes in India to Thailand could give this sugar rally legs
  • The longer-term target would be a 2011 high, just like cocoa’s
  • Some food-based commodities that may not have granted their investors a fair handshake before seem to be giving them a lot more now.

    First, it was U.S. cocoa, which has returned 40% since the start of 2023 to longs in the game and a compounded 55% for the entire 12 months it has been in rally mode.

    Now appears to be ​​turn of raw sugar. Compared with cocoa, the run-up here is only four weeks old. The rally in New York-traded raw sugar futures began in mid-August and has amassed some 10% over the past four weeks after prices hit five-month highs.

    What makes it significant, though, is that it’s the longest bull streak in sugar since April, or spring.

    And tight supplies could give the sweetener, an ingredient in almost every food preparation and a key biofuel, a shot at 12-year highs ultimately.

    If sugar gets there, it would be remarkable because that’s what cocoa did a week back — hit 2011 highs.

    Sugar Weekly ChartCharts by with data powered by

    From India to Thailand, Sugar Is a Bullish Story

    Jack Scoville, chief crop analyst at Chicago’s Price Futures Group, said traders were more worried about the lack of sugar exports from India than they are about actual exports from Brazil.

    India has gone from being a marginal sugar exporter five years ago to No. 2 in the world, behind only Brazil. The value of Indian sugar exports have soared from just above $810 million in crop year 2017-18 to $4.6 billion for 2021-22.

    Commenting on sugar in a Price Futures Group note issued Monday, Scoville wrote:

    “The Asian supply situation became more pronounced this week with dry weather the main feature. The Indian monsoon is expected to withdraw early this year and leave sugarcane high and dry. Many growing areas have been dry, anyway.”

    “Reports of increased offers from Brazil are still around but other origins are still not offering, and demand is still strong. Brazil reports very good harvest conditions but the weather in Southeast Asia is currently dry. Indian production is less this year and Pakistan also has reduced production and the monsoon has been uneven so far in both countries.”

    Scoville also cited concerns over Thailand’s production potential this year due to the El Nino, a weather phenomenon triggered by the warming of the Pacific Ocean that ultimately leads to drought.

    Government officials say Thailand is preparing contingency plans to deal with a potential drought that could last years, resulting in a squeeze of global supplies of sugar and rice — two of its biggest crops.

    Rainfall across the nation may be as much as 10% below average this monsoon season, and the onset of the El Nino weather pattern could lower precipitation even further over the next two years, according to officials.

    Thailand is facing widespread drought conditions from early 2024, authorities have warned.

    The dire outlook has prompted Thai authorities to ask farmers to restrict rice planting to a single crop to conserve water, and sugar producers see output falling for the first time in three years.

    A drought is certain to fuel inflation in the Southeast Asian nation as the cost of vegetables, fresh food and meat get pricier on reduced harvests and more expensive animal feed.

    “Thai sugar production is down a lot this year and many Asian countries are worried about the El Nino impacting future production,” Scoville said.

    Charts Show a 12-Year High is Open for Sugar

    Sugar Monthly ChartCharts by with data powered by

    The front-month contract in New York-traded raw sugar, October, hit five-month highs of 27.10 cents a lb on ICE Futures U.S. on Friday.

    Sunil Kumar Dixit, chief technical strategist at, said the current advance has enough potential for raw sugar to retest an April high of 27.41.

    “Successfully reclaiming a secondary top on the weekly chart indicates sugar’s resolve for continuing this rally,” Dixit said.

    The bull scenario would, however, require raw sugar to hold above the Weekly Middle Bollinger Band of 24.96 cents, he said.

    “If support conditions are not invalidated, the next leg higher for raw sugar may be the August 2011 high of 31.85 cents,” Dixit added.

    That milestone would match cocoa’s after a ton of the candy-and-beverage commodity hit 12-year highs of $3,691 on Sept. 6.


    Disclaimer: The aim of this article is purely to inform and does not in any way represent an inducement or recommendation to buy or sell any commodity or its related securities. The author Barani Krishnan does not hold a position in the commodities and securities he writes about. He typically uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables.

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