Cepea, February 18, 2020 – Crystal sugar prices increased 3.4% in the spot market of São Paulo State in the first fortnight of February (Jan. 31 – Feb. 14). On February 14, the CEPEA/ESALQ Index for crystal sugar (Icumsa 130-180 – São Paulo) closed at 78.34 BRL (18.22 USD) per 50-kilo bag, nominal level that had not been observed since late April 2017.
Aware of the price rises in the international market, agents from Brazilian refineries lowered the volumes supplied in the domestic spot. At first, these agents intended to export the crystal sugar stocked instead of selling it in the spot market. Purchasers, in turn, did not seem very interested in buying large amounts.
Still, prices for exports started to remunerate more than quotes in the spot market of SP State, after one and a half year. This scenario is linked to demerara sugar prices, which have returned to around 15 cents of dollar per pound at ICE Futures (New York Stock Exchange), and the strong US dollar, which reached nominal records in the first fortnight of February. This scenario had not been observed since late August/2018.
The first contract for demerara sugar traded at ICE Futures had not reached 15 cents of dollar per pound since early January 2018. The boost came from estimates for a world sugar deficit in the current season (2019/20). According to Commerzbank, Thailand (number two sugar-exporting country in the world) is going through a severe drought and should produce around 30% less sugar than it did last season (2018/19). Thus, Commerzbank estimates the world sugar deficit to surpass 7 million tons. Oil prices resumed rising in the international market too, helping to push up demerara sugar quotes in New York. On Friday, 14, the Brent oil barrel was traded at around 57 USD.