Sugar Futures Remain Bearish- Can the Sweet Commodity Rally?
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.
What We Know About Soybeans
Sugar Futures Remain Bearish- Can the Sweet Commodity Rally?
Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now!
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 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.
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.
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.
The daily NYMEX crude oil futures chart for July delivery highlights the 42.9% rally from $54.33 on April 9 to $77.62 per barrel on June 13.
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.
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.
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.
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
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
16 minutes ago
- Bloomberg
Alibaba Cloud Visionary Expects Big Shakeup After OpenAI Hype
OpenAI 's ChatGPT started a revolution in artificial intelligence development and investment. Yet nine-tenths of the technology and services that've sprung up since could be gone in under a decade, according to the founder of Alibaba Group Holding Ltd. 's cloud and AI unit. The problem is the US startup, celebrated for ushering AI into the mainstream, created 'bias' or a skewed understanding of what AI can do, Wang Jian told Bloomberg Television. It fired the popular imagination about chatbots, but the plethora of applications for AI goes far beyond that. Developers need to cut through the noise and think creatively about applications to propel the next stage of AI development, said Wang, who built Alibaba's now second-largest business from scratch in 2009.
Yahoo
44 minutes ago
- Yahoo
Starmer to raise Gaza ceasefire and UK steel tariffs in Trump meeting
Sir Keir Starmer is expected to raise the prospect of reviving ceasefire talks between Israel and Hamas and the future of tariffs on British steel as he meets Donald Trump in Scotland. The Prime Minister will travel to Ayrshire, where the US president is staying at his Turnberry golf resort, for wide-ranging discussions on trade and the Middle East as international alarm grows over starvation in Gaza. The two leaders have built a rapport on the world stage despite their differing political backgrounds, with Mr Trump praising Sir Keir for doing a 'very good job' in office ahead of their talks on Monday. But humanitarian conditions in Gaza and uncertainty over US import taxes on key British goods in America threaten to complicate their bilateral meeting. Peace talks in the Middle East came to a standstill last week after Washington and Israel recalled negotiating teams from Qatar, with White House special envoy Steve Witkoff blaming Hamas for a 'lack of desire' to reach an agreement. Since then, Israel has promised military pauses in three populated areas of Gaza to allow designated UN convoys of aid to reach desperate Palestinians. But the UK, which is joining efforts to airdrop aid into the enclave and evacuate children in need of medical assistance, has said that access to supplies must be 'urgently' widened. In his talks with Mr Trump, Sir Keir will 'welcome the President's administration working with partners in Qatar and Egypt to bring about a ceasefire in Gaza', Number 10 said. 'He will discuss further with him what more can be done to secure the ceasefire urgently, bring an end to the unspeakable suffering and starvation in Gaza and free the hostages who have been held so cruelly for so long.' The leaders will also talk 'one-on-one about advancing implementation of the landmark Economic Prosperity Deal so that Brits and Americans can benefit from boosted trade links between their two countries', it said. The agreement signed at the G7 summit last month slashed trade barriers on goods from both countries. But tariffs for the steel industry, which is of key economic importance to the UK, were left to stand at 25% rather than falling to zero as originally agreed. Concerns had previously been raised that the sector could face a levy of up to 50% – the US's global rate – unless a further agreement was made by July 9, when Mr Trump said he would start implementing import taxes on America's trading partners. But that deadline has been and gone without any concrete update on the status of UK steel. Downing Street said that both sides are working 'at pace' to 'go further to deliver benefits to working people on both sides of the Atlantic' and to give UK industry 'the security it needs'. The two leaders are also expected to discuss the war in Ukraine, which Number 10 said would include 'applying pressure' on Vladimir Putin to end the invasion, before travelling on together for a private engagement in Aberdeen. It comes after Mr Trump announced he had agreed 'the biggest deal ever made' between the US and the European Union after meeting Ursula von der Leyen for high-stakes talks at Turnberry on Sunday. After a day playing golf, the US leader met the President of the EU Commission to hammer out the broad terms of an agreement that will subject the bloc to 15% tariffs on most of its goods entering America. This is lower than a 30% levy previously threatened by the US president. The agreement will include 'zero for zero' tariffs on a number of products including aircraft, some agricultural goods and certain chemicals, as well as EU purchases of US energy worth 750 billion dollars (£558 billion) over three years. Speaking to journalists on Sunday about his meeting with Sir Keir, Mr Trump said: 'We're meeting about a lot of things. We have our trade deal and it's been a great deal. 'It's good for us. It's good for them and good for us. I think the UK is very happy, they've been trying for 12 years to get it and they got it, and it's a great trade deal for both, works out very well. 'We'll be discussing that. I think we're going to be discussing a lot about Israel. 'They're very much involved in terms of wanting something to happen. 'He's doing a very good job, by the way.' Mr Trump's private trip to the UK comes ahead of a planned state visit in September.
Yahoo
an hour ago
- Yahoo
The Smartest Cryptocurrency to Buy With $1,000 Right Now
Key Points This top cryptocurrency commands 60% of the entire industry's market cap, and it's the largest and most valuable digital asset by far. There is a vast financial ecosystem that supports greater adoption of this crypto. Investors can have confidence in this network's staying power for the long term. 10 stocks we like better than Bitcoin › Recent developments have created a more favorable regulatory backdrop for the cryptocurrency industry. That should gives investors confidence when assessing whether they will put money to work. But among the sea of choices out there, it can feel like an impossible task trying to pick one. I think it's best to keep things simple. If you have $1,000 that you're ready to invest in this exciting asset class, look no further than this top cryptocurrency. I view it as the smartest investment to make in the sector. Already a winner The entire crypto market is valued at roughly $4 trillion, as of July 24. However, there's one digital asset that reigns supreme. Bitcoin (CRYPTO: BTC), which carries a market cap of $2.4 trillion, represents 60% of the whole industry. I believe it's the best crypto to buy right now with $1,000. Introduced in early 2009, Bitcoin is the oldest cryptocurrency in the world. This gives it a valuable first-mover advantage. It has the brand recognition, as well as the mind share, that puts it ahead of all the other blockchains. Plus, Bitcoin is likely the first place investors look when thinking about allocating capital to cryptocurrency. Bitcoin is also the most liquid. Its market cap is more than five times more valuable than Ethereum's. Just in the past 24 hours, about $30 billion worth of Bitcoin was sent between addresses. Bitcoin's network effect can't be overstated. There is a large group of developers working on maintaining it, and there are miners and nodes scattered around the globe supporting Bitcoin's functioning. This doesn't mention all the market participants that use Bitcoin. Looking more broadly, Bitcoin has a deep (and growing) financial ecosystem that supports its adoption. Financial services, including exchanges, wallets, payment systems, exchange-traded funds, and custody services, is one robust area that highlights how much development is taking place with Bitcoin. One of the biggest risks was that the U.S. government would ban Bitcoin. This is no longer something to worry about, as Bitcoin has been fully embraced. For example, the White House announced a planned Strategic Bitcoin Reserve, showcasing the importance of owning the digital asset at the federal level. Thinking about the next decade and beyond Warren Buffett is a legendary investor who has found tremendous success because his philosophy centers on owning durable businesses that have stood and will continue to stand the test of time. Investors should adopt the same approach when looking at the cryptocurrency industry. Yes, there will be smaller, more volatile, and more exciting tokens whose prices can skyrocket in a short period of time based on changing investor sentiment. But no one can confidently say that they will even be around a decade from now. Bitcoin stands above the rest. I believe it's the crypto that has the most staying power. It has survived up until now, successfully making it through changing economic conditions and multiple crypto winters, only to bounce back stronger than ever. This gives me confidence that it will not only be relevant, but will be thriving, far into the future. Gold currently has a market cap of $23.1 trillion. For thousands of years, the precious metal has been viewed as the scarcest asset in the world. Bitcoin is even scarcer, with an absolutely finite supply cap of 21 million units. This makes it extremely attractive to own, especially when compared to the excessive spending and rising debt of the U.S. government and other countries around the globe. A $1,000 investment in Bitcoin today could be worth significantly more years and decades down the road. Should you buy stock in Bitcoin right now? Before you buy stock in Bitcoin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Bitcoin wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. The Smartest Cryptocurrency to Buy With $1,000 Right Now was originally published by The Motley Fool
