Cepea, October 2, 2020 – Crystal sugar prices ended September at around 88 BRL per 50-kilo bag in the spot market of São Paulo State (SP), despite the higher production. This nominal level had not been observed since mid-January 2017, offseason (2016/17 season).
The depreciation of Real against the dollar since the beginning of the current crop has been favoring Brazilian sugar exports, reducing supply in the spot market of SP. According to Secex (Foreign Trade Secretariat), from January to August 2020, Brazil exported 17.886 million tons of sugar, 64.02% more than that shipped in the same period last year (10.905 million tons) and almost the same as the volume exported in the year of 2019 (17.889 million tons).
Last month, the refineries in SP were trying to increase asking prices, not only for the higher quality sugar, but also for the darker types (lower quality). Liquidity increased in late September, due to some deals that were closed for higher volumes.
Between August 31 and September 30, the CEPEA/ESALQ Index for crystal sugar (São Paulo State) rose by 4%, closing at 88.52 BRL/bag (15.76 USD/bag) on September 30. In September, the Index averaged 86.53 BRL/bag, 6.2% up compared to that in August.
2020/21 SEASON – For the coming world season (2020/21), agents fear that a second outbreak of covid-19 in some regions in the world may limit the demand for sugar. In the current season (2019/20), Platts Sugar has indicated that the pandemics has reduced sugar consumption in Europe by 500 thousand tons, more than the expected by the European Committee, which may constrain valuations.
In central-southern Brazil, one of the major sugarcane producing regions in the world, fires and drought may damage crops and reduce the output in the 2021/22 season. Thus, agents expect rains in the coming months to bring some relief.