Cepea, July 16, 2020 – The trading pace for crystal sugar was slow in the spot market of São Paulo State in the first fortnight of July. Although demand was weak, agents from refineries were unwilling to lower asking prices, based on the recent valuation of demerara sugar in the international market. This scenario added to the strong dollar favored sugar exports in that period, reducing supply in Brazil.
According to Secex, in June/20, Brazil exported 3.004 million tons of sugar, 95.13% up compared to that in the same period last year (1.539 million tons). Revenue totaled 812.654 million USD in June against 450.283 million USD in June 2019.
Since April/20, when the 2020/21 crop officially started, the monthly averages for the CEPEA/ESALQ Index have been higher than that in the same period last year, in real terms (values were deflated by the IGP-DI from June/2020). In June, the Index averaged 76.24 BRL/bag, 13.05% higher than that in June/19 (67.44 BRL/bag).
Between June 30 and July 15, the CEPEA/ESALQ Index for crystal sugar (São Paulo State) rose by 1.5%, closing at 77.29 BRL (14.36 USD/bag) per 50-kilo bag on July 15. In the first half of the month (July 1st to 15), the Index averaged 76.77 BRL/bag, 0.5% up compared to that in the first fortnight of June.
According to Unica (Brazilian Sugarcane Industry Association), from April/20 to June/20, the refineries from SP State crushed 139.845 million tons of sugarcane, 9.17% more than that in the same period last year. This season, 9.224 million tons of sugar have been produced, 49.03% more than that in the same period of the 2019/10 crop.
INTERNATIONAL MARKET – Perspectives for high sugar supply in both Brazil and India and concerns about a possible weak demand pressed down sugar quotes in the first half of July. On the other hand, as several regions in the world have relaxed social distancing advice, oil prices tend to rise worldwide, which may increase ethanol’s competitiveness. Thus, the production mix may be influenced, favoring ethanol production rather than sugar. Higher sugar imports from China may also boost production, since the Asian country fears a lack of sugar, due to the covid-19 pandemic.