Liquidity is low and prices weaken in the Brazilian market in April

Cepea, May 5, 2020 – With the social distancing advice from local and state governments in Brazil, the demand for sugar decreased in the spot market of São Paulo State in April, primarily from the industry, which usually trades for prompt-delivery – refineries reduced or halted activities. In general, crystal sugar sales (Icumsa up to 180) in the spot market were sporadic.


In the last week of the month, the volume of crystal sugar traded in the spot market of São Paulo State increased slightly. Gradually, refineries were resuming production, trying to close new deals for prompt-delivery.


Still, prices continued weak, returning to around 75 BRL per 50-kilo bag. Refineries from São Paulo have been producing higher sugar amounts compared to that last year. Initially, supply is higher for lower quality sugar, and the low price levels paid for this product end up reducing the prices paid for the higher quality sugar (Icumsa up to 180).


Between March 31 and April 30, the CEPEA/ESALQ Index for crystal sugar (Icumsa 130-180 – São Paulo) remained practically stable (+0.4%), closing at 75.94 BRL (13.94 USD)/50-kilo bag. However, the average in April, of 77.38 BRL/bag, is 1.3% lower than that from March/2020.


According to Unica (Brazilian Sugarcane Industry Association), in the first fortnight of April/2020 (2020/21 crop), the refineries from São Paulo crushed 13.485 million tons of sugarcane, 105.28% up compared to the volume crushed in the same period last season. Of this total, 42.35% were allocated to sugar production, against 28.13% in the same period last year. Thus, 605 thousand tons of sugar were produced in the fortnight, more than three-fold that in the same period last crop.


In general, the low demand for fuel (because of the social distancing advice, due to the coronavirus pandemic) and the strong dollar against Real may lead refineries to allocate more sugarcane to sugar production, boosting Brazilian sugar exports. According to the USDA (São Paulo office), in the 2020/21 business year, Brazil should export 28.85 million tons of sugar, 33% more than that in the 2019/20 cycle (1.93 million tons).




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