Higher global production keeps dropping prices

Brazilian sugar prices have been moving down for more than one month, even with the off-season period. Between January 16 and last Wednesday, 28, the CEPEA/ESALQ Index for crystal sugar (Sao Paulo state) decreased 6.8 percent in real and 5.8 percent in dollar, from 37.13 to 34.61 reals or from 17.34 until 16.32 dollars per bag of 50 kilos.

Even with Brazil in off-season period, the pressure comes from the international prices that reflect estimative of higher global sugar surplus in the 2006/07 crop. Moreover, there are forecasts for enlargement in the next crops in several countries. The decreases are being limited by the firm sugar and ethanol demands.

The International Sugar Organization (ISO) shows a global surplus of 7.2 million tons in the 2006/07 crop, 24 percent higher than the previous forecast. The estimative of production increased from 158.3 million tons to 160.2 million tons, overtaking the 2005/06 crop (152.7 million tons). The global consumption should rise from 150 million tons (2005/06) to 153 million during the current crop.

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