Market expects Brazilian sugar mills to reduce sugar production, sugar futures rise to over a one-month high.

Raw sugar futures rose to a more than one-month high on Monday as market participants expected Brazilian sugar mills to use more sugarcane for ethanol production, reducing sugar production and prompting investors to cut their bearish bets. The most active raw sugar futures contract on the New York market rose by about 1.7% at one point, reaching over 15 cents per pound, and continued to rise for a second consecutive trading day. Analysts believe that the escalation of conflicts in the Middle East has boosted expectations for biofuel demand, which is one of the important factors supporting prices. However, the weakening of domestic ethanol prices in Brazil has also to some extent limited the incentive for sugar mills to further use sugarcane for ethanol production, leaving the market outlook uncertain. Bruno Lima, head of soft commodities at StoneX, stated that the market is still assessing whether the increase in ethanol production can be adequately absorbed, and there is still a lot of uncertainty in the allocation of sugarcane between sugar and ethanol. From a technical standpoint, raw sugar futures have broken through the 200-day moving average, which is seen as an important bullish signal. Data from the US Commodity Futures Trading Commission (CFTC) shows that managed money has recently started to reduce their short positions. Analyst Arnaldo Correa from Archer Consulting pointed out that if the current upward trend continues, sugar prices may break through the 17 cent per pound level. Meanwhile, cocoa futures have also strengthened, with prices on the New York market reaching highs not seen since February. Earlier in the year, cocoa prices had dropped significantly due to supply pressures and concerns about demand.