Crystal sugar prices drop, despite the dollar appreciation; sales from retailers increase in late March

Cepea, April 2, 2020 – Liquidity was low and crystal sugar prices dropped in the spot market of São Paulo State in March. Although the US dollar was at a record level (higher than 5.00 BRL) during all the second fortnight, which encourages exports, prices did not react in Brazil. Besides the current economic uncertainties, demand is usually lower when the crushing season is about to start. Purchasers were waiting for an increase in sugar supply from the new season at lower prices.

 

Of the sample mills consulted by Cepea in SP State, nearly 31% have already been crushing the 2020/21 sugarcane crop. Until the end of April, 99% of the refineries from SP should be operating.

 

Thus, some of the agents consulted by Cepea reported that the deliveries already scheduled were postponed. Between February 28 and March 31, the CEPEA/ESALQ Index for crystal sugar (Icumsa 130-180 – São Paulo) dropped by 6.5%, closing at 75.64 BRL (14.56 USD)/50-kilo bag in SP State on March 31.

 

RETAIL – Amid the uncertainties caused by the covid-19 outbreak, consumers increased groceries purchases in supermarkets, and sugar, which is part of the basic shopping basket, was one of the products with the highest sales increase in late March. Similar to what happened to other products, sugar shelf prices rose sharply. However, some mills suspended sales, possibly planning to sell the product later, to ensure there will be sugar to deliver to those who purchased it previously (through contract).

 

INTERNATIONAL MARKET – At the New York Stock Exchange (ICE Futures), demerara sugar quotes were pressed down by the effects of the coronavirus outbreak. The US dollar appreciation against Real encourages Brazilian sugar exports, increasing supply in the international market. Besides, more than a billion people have been socially isolated worldwide, and the dispute between Saudi Arabia and Russia pressed down Brent oil quotes to the lowest level in the last 18 years, to around 20.00 USD per barrel, reducing sugar prices. Still, according to the Job Economia consultancy, the amount of sugarcane from the 2020/2021 crop allocated to sugar production should increase to 46%, around 10 percentage points up compared to that in the season that ended last month.

 

(Cepea-Brazil)

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