White sugar futures in London rose for a third straight week, slightly outpacing raw sugar and keeping refining margins near their highest levels in two years.
A blistering rally, mirroring other crop markets at risk from El Niño, has both raw and white sugar up more than 10 percent so far this month. But prices for the processed sweetener rose more this week as raw supplies remain abundant in top producer and exporter Brazil, prolonging a trend this year of a widening premium for refined sugar over raw.
The most-active white sugar contract fell on Friday but still gained more than 1 percent this week.
The spread is a key gauge of refining profitability, with levels above $100 a ton typically providing a strong incentive to keep processing. White sugar’s premium settled near $150 a ton early last month before falling, but has started to rise again in recent trading sessions.
Both raw and white sugar markets have surged this month as potentially the strongest El Niño in decades threatens top producers. Supporting interest in refined sugar, the outlook is particularly stark in Europe-where multiple heat waves have parched crops, including the continent’s sugar beets that are processed directly into white sugar. Europe’s sugar output may fall to the lowest in more than a decade as a result.
‘There had been hope that perhaps the EU might see some relief before they begin harvesting beets, but instead, they get yet another heat wave,’ said Mike McDougall, an analyst at McDougall Global View.
Analysts are increasingly expecting tighter supplies in the 2026-27 season that starts in October. And the global shortfall may widen further in the 2027-28 season on lower cane and beet plantings, according to Czarnikow analyst Gerard Horner.
Open interest has also risen alongside prices, suggesting the moves aren’t driven solely by speculators covering bearish bets, but also by new buying, according to Paris-based brokerage Deepcore.
Hedge funds were more bullish on white sugar than any other period on record over the week ending August 11, according to data released after market close. The shift was driven in large part by speculators opening new long positions rather than closing existing shorts.
Still, challenges remain for the market, especially for raw sugar. Brazilian raw sugar remains plentiful, and subdued import demand has left supplies available in the near term. The recent price gains also mean that sugar commands a sizable premium over ethanol, which may incentivize mills to produce more of the sweetener.
In other softs, arabica futures fluctuated on Friday. A deadly earthquake this week in Colombia, the world’s second largest producer of the premium bean, has upended trading logistics at a time when stockpiles are already low. But the country has since partly resumed coffee exports through the Buenaventura port.