Low supply and firm prices during harvest time

The domestic sugar supply in the spot market is considered low in this harvest time, helping to support prices. The CEPEA/ESALQ Index for crystal sugar moved from 49.00 to 50.00 reals per bag of 50 kilos (or 22.20 dollars per bag, in average), since the end of May.

According to Unica, the Center-Southerner of Brazil should produce a volume 15.8 percent higher in this season, but most part of the additional volume (68.6 percent) might be exported. Only 31.4 percent will be traded in the domestic market.

That is due the higher international prices, in part supported on lower subsided sugar exports from European Union, as established by the World Trade Organization (WTO).

The Brazilian press points that the construction of ethanol plants in new areas should move at a slower pace than the expected. Many factors, including higher land costs, should impact on the future positions, in future exchange or in term contracts.

The sugar cane processing reached 69.38 million tones up to June 1st, an equivalent to 18.5 percent of the total processing projected to this season (375 million tones), according to Unica (São Paulo Sugar Cane Agroindustry Union). That resulted on a production of 4.03 million tones of sugar, 1.07 billion liters of anhydrous ethanol and 1.61 billion liters of hydrated ethanol.

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