The rise in sugar prices in New York and London is expected due to restrictions on imports from Mexico, following the increase in oil prices.

Prices for sugar have increased in New York and London due to rising oil prices. The USA will reduce sugar imports from Mexico, which will raise prices and stimulate the search for alternative suppliers.

Rains in Brazil have improved the prospects for sugarcane crops, although long-term challenges are expected.

29 June 2024

On Thursday, May raw sugar No. 11 in New York (SBK24) saw an increase of +0.33 (22.52; +1.49%), while May London white sugar ICE No. 5 (SWK24) rose by +6.90 (652.50; +1.07%), as reported by Barchart.

Sugar prices demonstrated a moderate increase on Thursday: sugar in New York reached a monthly high, while in London its price rose to a one-and-a-half-month high. This was influenced by the rise in oil prices (CLK24), which became a bullish factor for sugar. The increase in crude oil prices favors the rise in ethanol prices, which may lead to a redirection of ethanol production at global sugar mills, thereby limiting sugar supplies.

Sugar also received support after American sugar producers called for restrictions on sugar imports from Mexico. The American Sugar Alliance demanded that the U.S. government cut by 44% the volume of sugar that Mexico can export to the U.S. It is expected to result in price hikes and prompt the U.S. to purchase sugar from other countries, boosting the use of already limited global sugar reserves.

Despite some concerns regarding dry conditions, recent rains have apparently improved the prospects for sugarcane crops in Brazil for the 2024/25 season. Rabobank noted in its report:

"It is possible that Brazil will have a good initial crop, which could negatively impact short-term prospects, but the volumes of harvested sugarcane may disappoint later this year."

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