Cepea, October 1 2019 – Crystal sugar prices in spot market of São Paulo State have finally started to reflect the lower production estimates for the 2019/20 crop. In late September, the average prices returned to around 62 BRL per 50-kilo bag, same level observed in mid-June/19.
Between August 30 and September 30, the CEPEA/ESALQ Index for crystal sugar (SP) increased 2.8%, closing at 63 BRL (15.18 USD) per 50-kilo bag on Sept. 30. As supply decreased, liquidity was low in the Brazilian spot market – deals for larger amounts were occasional.
Unica (Brazilian Sugarcane Industry Association) estimates sugar production in the 2019/20 season (Apri/19 to the first fortnight of Sept/19) to have reached 13.8 million tons in São Paulo State, 5.74% down compared to that in the same period last year. The production mix in that state continues higher to ethanol – of the 255.55 million tons of sugarcane crushed, 57.94% were allocated to ethanol production and 42.06%, to sugar production.
The exchange of the October/19 Future – which expires on October 30 – for the March/20 Future (demerara sugar) at the New York Stock Exchange (ICE Futures) may be helping to underpin crystal sugar quotes in the Brazilian market too. The Oct/19 Future is around 11 cents of dollar per pound, while the Mar/20 Future is at 12 cents of dollar per pound. Calculating the parity between the domestic and the international markets, the price gap is narrow, at only 1.79 Real per 50-kilo bag.