⁍ Speculators hold a long position of roughly 200,000 contracts on ICE Futures.

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⁍ The high prices are expected to stimulate output in countries including top producer Brazil.

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⁍ Should output continue to increase, it threatens a glut that could sink prices.

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– Sugar prices are at their highest level in eight months as hedge funds and money managers pile into the market, Reuters reports. According to S&P Global Platts, the long position of hedge funds and money managers in raw sugar futures on New York’s ICE Futures reached 200,000 contracts on Wednesday, the highest since 2016. The move is likely due to rising production in countries such as Brazil and India, which could put out another record crop of 38 million tons this year. But analysts say the market fundamentals aren’t there. “I think funds are pushing prices higher in an artificial manner,” says Arnaldo Correa of Archer Consulting in Sao Paulo. “Should output continue to increase, it threatens a glut that could sink prices.” There’s also concern that Brazil’s crop could be smaller than expected due to below-average rains this year. In India, the government hasn’t laid out its plans for subsidies for producer exports. The dollar has weakened, which tends to boost the prices of dollar-denominated commodities. Analysts say funds may liquidate positions if India confirms expectations to subsidize around 5 million tons of exports, which will add more supply. sugar prices up 60% from a low of 9.05 cents in April in the peak of coronavirus-related measures. Some sector specialists noted that four years ago funds built a long position of nearly 340,000 contracts, pushing prices to almost 24 cents per pound. Once they started selling, sugar dropped by 25% between October and December. ‘In 2016, we had a similar situation, with funds pushing prices higher. Until the market collapsed.’