PALM SPRINGS, CALIF. — The world sugar market is managing a barrage of mixed signals from a multitude of perspectives. Will the current global deficit shift into a surplus later this year? Will sugar cane production in Brazil, the world’s leading sugar producer and supplier, hold up after sustaining quality depreciation from excessive dryness and recent fires? Will India, the world’s second-largest sugar producer, withdraw its recent promise to export sugar? Do the GLP-1 drugs, which have been chipping away at domestic demand for sugar-based foods, have broader implications on global demand? And will the large short position currently held by speculators in the No. 11 futures suddenly unwind? According to analysts at the recent International Sweetener Colloquium, all of it is having an impact on prices.

“Over the first quarter of this year, prices have rallied from basically 17½¢ up to 21½¢ as of this morning (Feb. 24),” Jeff Dobrydney, senior vice president and head of futures and options at JSG Commodities, told attendees during the global outlook session at the Colloquium. “That's quite a move.”

He said he expected the volatility to continue throughout the year.

“The No. 11 has shown us that it can rally on a dime, and it has done that,” Dobrydney said. “A 3¢ to 4¢ rally over the course of one month is nothing to the sneeze at.”

Still, despite the volatility, prices largely have remained rangebound, oscillating primarily between 18¢ and 20¢ the past 12 months in sharp spurts, which was creating opportunities for traders.

“The market is moving very, very quickly, which gives you a lot of opportunity, if you’re quick to act, but that’s not always the truth of most buyers,” said Vincent O’Rourke, trader and market analyst at C. Czarnikow Sugar, Inc.

For most buyers, trading on market fundamentals tends to be the preferred method of fund management, but outside circumstances have been heavy influences recently.

“It’s macroeconomic factors, like world events and global economies that have absolutely nothing to do with the world sugar market, that have been impacting the market and impacting price,” Dobrydney said, referencing the Trump administration’s (then) upcoming tariff rollouts and Brazil’s economic pressures.

Dobrydney said there has been an historic synchronization between Brazil’s currency and the No. 11 futures.

“As the Brazilian real has strengthened to begin this year, so have the sugar prices, but in terms of some Brazilian economic notes, it’s not really rosy,” he said. “We’re seeing a rise in inflation and high interest rates. As a matter of fact, Brazil’s inflation rate in January was measured at 4.56% with the expectation that it will rise to 5.2% in 2025.”

Fundamentals still were relevant to the sugar market, but most in the trade were in a wait-and-see mode, and they were mostly waiting on production updates from Brazil, O’Rourke said.

“All eyes are on Brazil,” he said. “As soon as this story hits, the market will move.”

This year, Brazil was expected to produce about 39 million tonnes of sugar, with an outlook for 43.6 million tonnes in 2025-26 (April-March), which is a record high. The prospect of massive Brazilian production was helping to offset other market disruptions, like India’s vacillating export plans.

“We saw massive movement in the world market because India said it was going to export a million tonnes, but then the market cracked two weeks later, saying it’s not that big a deal,” O’Rourke said. “But Brazil is a big deal.”

But he cautioned that Brazil still carried plenty of uncertainty.

“In 2024 Q1, the rain was very disappointing,” O’Rourke said. “That led to very dry cane, poor yields, and it also meant that when the fires started, it was going to be a lot harder to control. Now the rains in Q4 have been a lot better, and Q1 has started fairly well, but the great lack of rain in Q1 (2024) damaged the cane, and the fires did even more damage, but no one is quite sure what the real impact is going to be. We need very good rain in March to hope that the cane does recover and produce the crop that we are expecting.”

The analysts also were watching speculator activity, which has incurred a surprisingly deep short position.

“It makes zero to no sense,” Dobrydney said. “Speculators have not been this short in sugar since we were all locked down, so I can’t figure out why at 17½¢ and 18¢ these companies, machines, algorithms, perhaps even some humans involved there, are running that sort of position at this stage.”

He said one possible explanation could be that traders were shorting sugar to offset their long positions in the coffee market. But it was a tenuous dynamic that could quickly spark a rally in sugar prices.

“The speculators and the traders are very quick to move on the news or the rumor of a story, and you’ll see a very, very big impact if we hear a bearish story or bullish story, then the speculators can shift their position very, very quickly and move the market with it,” O’Rourke said.

The trade also kept an eye on global demand, which was starting to shift downward in major markets due in part to increased usage of GLP-1 medications.  

“It’s the first time that we’ve had a real look at global consumption being halted,” O’Rourke said. But he then added, “These drugs are primarily impacting the EU and the United States, but the sugar market is much bigger than those two regions. You can see growth of demand in China completely outweighing any impact of these GLP-1 drugs.”

O’Rourke also said the decline in production likely may be counterbalanced by byproducts as sugar mills work to mitigate consumption habits.

“The most work we get as part of the consulting team is looking at byproducts of cane,” O’Rourke said. “At the moment, sugar and ethanol are the No. 1 products they make, but we’re seeing a lot of people asking about sustainable aviation fuel, bioplastics, animal feed. We may well see that sugar becomes a byproduct of making bioplastics or aviation fuel.”

With all these factors pushing and pulling on the global sugar market, both Dobrydney and O’Rourke said world raw sugar prices likely will maintain their current volatile but rangebound pattern, with O’Rourke projecting a 19¢ to 21¢ a lb range, while Dobrydney forecast a wider margin of 18¢ to 23¢ a lb.