Trade of The Day – SUGAR

Facts:

• In Brazil, the world’s largest producer of sugarcane and sugar, a significant portion of sugarcane is expected to be redirected to ethanol production. This means a lower share of sugar in the processing mix – forecast to fall from 49.5% in 2025 to 48% in 2026.
• The share of anhydrous ethanol blended into gasoline is also increasing – from 27% to 30%.
• A USDA report indicates that due to a significant increase in ethanol production profitability, despite a slight increase in sugarcane harvests, sugar production and exports are expected to decline in 2026.

Trade idea : Long position on SUGAR at the market price

• Target: 16.5
• Stop: 13.6

SUGAR (D1)

Source: xStation5 OPINION : Strong increases in crude oil and gasoline prices provide structural support for ethanol prices, as ethanol is used as a “filler” in gasoline. A significant rise in ethanol production profitability implies a substantial shift of sugarcane supply toward ethanol production rather than sugar. This means lower sugar production, which should align with higher prices. Options market positioning suggests a predominance of short positions; however, this does not necessarily imply inevitable declines—if high gasoline prices continue to pressure the market and/or rainfall in key regions comes in below expectations, it could create ideal conditions for a so-called “short squeeze.” Methodology and assumptions:

• The recommendation is based on technical analysis of the chart—particularly EMA averages and Fibonacci levels—as well as fundamental analysis of the sugar and sugarcane market.
• The target level was set based on Fibonacci levels.
• The protective stop-loss order was determined based on a favorable risk-to-reward ratio and also based on a Fibonacci level.