February ends with limited sugar supply and prices on the rise in Brazil

Cepea, March 2, 2021 – In mid-February, demerara sugar prices rose to 17 cents of dollar per pound at ICE Futures (New York Stock Exchange), which was not observed since mid-March 2017. According to Cepea calculations, with that increase, the Brazilian exports of crystal sugar resumed remunerating more than sales in the domestic market, pushing up quotes in the national spot.

 

In the last week of February, agents from sugar mills in São Paulo State (SP) continued unwilling to lower asking prices for the product. The accomplishment of contracts for delivery to both the domestic and the international markets contributed for that scenario in the 2020/21 offseason.

 

Between January 29 and February 26, the CEPEA/ESALQ Index for crystal sugar (São Paulo State) rose by 1.55%, to 109.26 BRL (19.82 USD) per 50-kilo bag on Feb. 26.

 

At ICE Futures, demerara sugar prices were largely boosted by the perspectives for a lack of the product in the short term. In central-southern Brazil, the number one sugar-producing region in the country (which is currently in the offseason), sugarcane crushing may be delayed. India, the second major sugar-producing country in the world, continues to face difficulties to export the product because of the lack of containers. Thailand and the European Union may produce less sugar because of the unfavorable weather to sugarcane crops, which helps to push up quotes in the international market.

 

The valuation of Brent oil in mid February (to 63 – 65.40 USD/barrel) added to the strong dollar compared to Real (at around 5.40 BRL) helped to push up prices too. This combination should increase gasoline quotes even more, enhancing the competitiveness of ethanol against this fossil fuel and encouraging ethanol production rather than sugar production.

 

(Cepea-Brazil)

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