El Niño fears drove record sugar futures open interest, ICE exchange says

Investors, food companies and commodities traders, driven by fears that the El Niño climate event could hurt global sugar production, drove record-high open interest in sugar contracts last week, the Intercontinental Exchange said on Wednesday.

ICE said open interest, the number of outstanding contracts, in raw SBc1 and refined sugar LSUc1 futures reached 2.3 million contracts on Friday, surpassing the previous record from February 2010.

"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.

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. It estimated a 69% chance of a "historic El Niño" that would be stronger than all previous ones since 1950.

Tropical commodities, including cane sugar, could be acutely exposed to a strong El Niño that would change the pattern of rain and increase temperatures.

During last week's record sugar trading open interest, financial investors were particularly aggressive buyers, erasing the long-term bearish bet they held on raw sugar.

Funds poured a record $2.5 billion into raw sugar contracts during the period, said market analyst Peak Trading Research.

Mills took the opportunity to sell contracts and lock in better prices for their sugar.

Below-average monsoon rains in India, the world's second-largest producer, might hurt the sugarcane crop there, while experts fear excessive rain could disrupt the last stage of harvesting in Brazil, the world's top grower.