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Have recent events (the “US-Iran war”, the strength of the Brazilian real, etc.) brought the sugar market out of its long-term bearish trend?
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If sugar is going to see a trend reversal, it will likely be because funds begin to cover some of the record short futures positions.
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Crucially, the market forward curve remains in contango, indicating that there is no fear of supply shortages at this time.
Earlier this week, an old media friend sent us an email asking about markets tied to the US-Iran war. Knowing my friend, I could read the fatigue in her email: “I haven’t had time to look at much else besides oil and gold, but what is all this I’m hearing about rising sugar prices due to the US-Iran conflict?” She followed up with: “Do you have any idea why sugar prices have gone up? Is there a shortage of supply? Or is the Middle East of particular concern when it comes to sugar supply and demand?”
As always, I thanked my friend for getting me out of the rut I’m in with corn, soybeans, and gold and silver. It’s comforting to think about other markets from time to time, even if gold and crude oil are the two biggest stories in commodities right now.
Let’s put the pieces of the sugar market together and see what we see, looking at the weekly closing chart of the nearby futures chart number 11 (SBK26). Let’s block out all the noise and focus on one thing: the trend: the direction of price over time. What I see is as clear a downtrend as we will find almost anywhere else. It is interesting to note that the market recorded a high weekly close the week of Halloween 2023, the nearby futures contract was priced at 27.77 (cents per pound). At the close on Wednesday, March 4, 2026, the nearby contract is priced at 13.73, meaning the market has lost just over 50% of its value.
Has the market recovered since the US launched its anti-Iran strategy in late February? For the week, the nearby May contract is down 0.16. As far as I’m concerned, the market trend is still bearish, which fits with Newton’s First Law of Motion as applied to markets: a trending market will remain in that trend until an external force acts on it. And that force is usually the flow of non-commercial money.
The most recent CFTC Trader Commitments report (legacy, futures only) showed a non-commercial futures net short position of 246,123 contracts as of Tuesday, February 24. This was a decrease of 7,469 contracts from the previous week’s record futures net short position of 253,592 contracts. For the record, the non-commercial futures position in the week of October 30, 2023 was a net long position of 213,589 contracts, meaning the funds changed their position by 467,181 contracts. Almost half a million contracts. That’s substantial.
