It’s Been a Sweet Year for Sugar Investors

Halloween may be over, but sugar investors got the real treat this year. 

A global sugar deficit caused prices to rise this year, bringing the Teucrium Sugar Fund (CANE), which tracks futures tied to the sweet stuff, up more than 17% year to date. The fund has had net inflows of nearly $40 million in 2026, with about $59 million in AUM, according to ETF.com data. Weather has impacted sugar production across the globe and political factors in Brazil have exacerbated the deficit. 

“Whenever we see a large crop price rise in a year, weather, the vast majority of the time, is the driver,” said Seth Goldstein, a senior equity analyst at Morningstar. Due to high global oil prices from the US-Iran conflict, Brazil is using more sugar for ethanol, which then leaves less for refined sugar products, he added. 

Sugar Rush

Brazil’s recent general election and its associated currency fluctuations have also had an impact, said Jake Hanley, chief growth officer at Teucrium. Sugar prices tend to follow the Brazilian real, which has had large swings in recent months, weakening sharply after the election. Sugar farmers sell their crop in dollars, but the rest of their expenses are paid for in real. “As the real weakens relative to the dollar, [the farmer] has a higher incentive to sell that sugar right away, because he now can get more real for his dollar,” Hanley said. 

But El Niño is the real price driver: 

• Thailand and India, which together account for about a quarter of the world’s global sugar production, have both been suffering from droughts that have cut crop yields. India, facing a domestic sugar deficit, temporarily banned exports and started allowing sugar imports, which is a rarity for the country. 
• Meanwhile, Brazil, also responsible for about a quarter of global sugar production, is “too wet,” said Hanley. Excess mud has made it hard to harvest, and while rain is good for growing sugar cane itself, as the plants get more water, the amount of extractable sugar in the plants declines.  

Fickle As the Weather: Conversely, weather also helps sugar prices come down. “These high rises tend to not last too long unless you get bad weather for multiple years at a time,” said Goldstein. “If you’re buying a sugar ETF after the crop price has risen almost 20%, that gets to be a little more speculative, hoping for a further crop price increase, because I would assume that the impact from a lower harvest is already priced into the crop.”