Sugar futures hit record open interest on El Niño supply fears

Sugar futures markets reached unprecedented levels of activity last week as fears of a powerful El Niño weather event drove investors, hedgers, and speculators to pile into contracts at a historic pace, pushing prices to their highest point in more than a year.

Intercontinental Exchange ↗ 2.40% reported on August 19 that open interest in its raw and refined sugar futures reached 2.3 million contracts on August 14, surpassing the previous record set in February 2010. Open interest across ICE Sugar No. 11, the global benchmark for raw cane sugar, hit a record 2.2 million contracts, while ICE White Sugar reached 188,000 contracts — up 43% year-over-year combined.bnnbloomberg+1

"Supply and demand balances are shifting, a strong El Niño forecast through January 2027 is weighing on supply outlooks, and uncertainty around some of the world's largest producing regions is prompting participants to hedge across the curve," said Matthew Ryan, ICE's senior director for soft commodities.investing+1

Fund Buying Reaches Historic Levels

Financial investors were the most aggressive participants during the record-setting week, erasing the long-term bearish bet they had held on raw sugar. Funds poured a record $2.5 billion into raw sugar contracts over the two-week period — the largest two-week net purchase in 20 years, according to market analyst Peak Trading Research. The buying spree pushed NY raw sugar to a 15-month high and London white sugar to a 16-month high.nai500+2

Archer Consulting director Arnaldo Corrêa said short covering could push prices toward 20 cents per pound, while Safras & Mercado expects prices to reach 22 cents in October and potentially 25 cents between December and the first quarter of 2027.nai500

El Niño and Supply Deficits Drive the Rally

The U.S. Climate Prediction Center sees a 90% chance of a very strong El Niño between the second half of 2026 and the first half of 2027, with a 69% chance it could be the strongest since 1950. The pattern threatens production in Brazil, India, and Thailand — the world's three largest sugar-producing regions.bnnbloomberg+1

India's cumulative monsoon rainfall is running 13% below normal as of August 19, and Bloomberg reported this week that Indian officials are weighing proposals to cut or scrap the 100% import duty on sugar to boost domestic supplies. India, usually an exporter, last imported sugar in substantial volumes during the 2017-18 season.barchart+1

Meanwhile, analysts have sharply revised their global balance forecasts. Green Pool Commodity Specialists raised their 2026/27 global sugar deficit estimate to 3.3 million metric tons from 1.76 million in June, while StoneX raised its deficit forecast to 1.7 million metric tons from 550,000. Safras & Mercado projected a potential 10-million-tonne global shortfall in the crop year starting in October.nai500+2

Brazil's Harvest Troubles Add Pressure

In Brazil, the world's largest sugar producer, Center-South June production fell 26.3% year-over-year to 3.903 million metric tons, according to industry group Unica. Harvest progress is 28 days behind schedule, and renewed September rains could leave remaining cane unharvested. Higher crude oil prices linked to the U.S.-Iran conflict have also incentivized mills to direct more cane toward ethanol rather than sugar.inkl+2