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Have recent events – the US-Iran “war”, Brazil’s real power, etc. – broken the sugar market from a long-term downtrend?
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If sugar sees a change in trend, it will likely be due to funds starting to cover record large short futures positions.
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Fundamentally, the market’s forward curve remains in contango, indicating fears of short supply at this time.
Earlier this week, a longtime friend in the media asked via email about the markets linked to the US-Iran war. Knowing my friend I read ironically in her email, “I see more than oil and gold, but what is this I hear about sugar prices due to the US-Iran conflict?” She said: “Do you have any insight into why sugar prices have gone up? Is there a supply shortage? Or a particular Middle East concern when it comes to sugar supply and demand?”
As always, I thanked my friend for breaking me out of the place with corn/soybeans and gold/silver. Sometimes it’s refreshing to think about other markets, even if gold and crude oil are the two main commodity stories at the moment.
Let’s put the pieces of the bearish market together and see what we see, with a weekly close only chart for the 11 futures (SBK26) chart. Let’s shut out all the noise and focus on one thing: the trend – the direction of price over time. What I see is as clear of a downward trend as we will find almost anywhere. It is interesting to note that the market posted an all-time high the week of Halloween 2023, with the futures contract priced at 27.77 (cents in the pound). As of Wednesday, March 4, 2026, the close contract is priced at 13.73 which means the market has lost only 50% of its value.
Has the market risen since the start of US sanctions against Iran at the end of February? The close May contract for the week is down 0.16. As far as I’m concerned, the market trend is still bearish, Newton’s first law of motion applies to markets: a trending market will stay in that trend unless acted upon by an external force. And that power is usually non-traded money flows.
The latest CFTC Commitment of Traders Report (legacy, futures only) showed a non-traded net short futures position of 246,123 contracts as of Tuesday, February 24. This was a decrease of 7,469 contracts from the previous week, which recorded a net short futures position of 253,592 contracts. For the record, the non-traded futures position in the week of October 30, 2023 was net long by 213,589 contracts, meaning funds flipped their positions by 467,181 contracts. Almost one and a half million contracts. This is significant.
