Sugar futures in New York have dropped nearly 15% this year amid a global production recovery, hitting the lowest level in four years.
Even after a modest rebound on Monday, the benchmark raw sugar contract closed at 16.94 cents per pound — a price below the production cost in most major producing countries and close to break-even levels even in Brazil, the world’s most competitive supplier.
According to Cristian Quiles, an analyst at FG/A, prices may be approaching a floor. “Even with a global surplus, it’s hard to see sugar holding at or below these levels in the medium term due to production costs. It’s simply too low for most producers,” he said.
In Brazil, where mills can switch between producing sugar or ethanol, prices hovering between 15 and 16 cents a pound may end up favoring ethanol output, Quiles added.
