Cepea, March 17, 2021 – The supply of higher quality sugar continues low in the spot market of São Paulo State (SP). Still, the CEPEA/ESALQ Index for crystal sugar decreased in the first fortnight of March. Between February 26 and March 15, this Index dropped by 3.95%, closing at 104.94 BRL (18.59 USD) per 50-kilo bag on March 15.
As regards supply, with lower inventories because of the offseason, agents from sugar mills in SP reduced supply to the spot market, aiming to deliver the product previously purchased. As for demand, purchasers were closing deals sporadically only. This scenario may change in the first fortnight of April, when many mills in SP should have begun crushing the sugarcane from the 2021/22 season.
The 2021/22 season in central-southern Brazil should begin slightly later than the previous (2020/21), underpinning prices abroad. Besides, productivity is forecast to decrease in this Brazilian region. Sucden estimates the sugarcane output from central-southern Brazil to be 10% lower in the coming season. In Thailand, Pakistan and the European Union, production should be hampered by bad weather conditions.
According to Opep, oil production in April should be the same as that in March, pushing up quotes. Thus, gasoline prices should increase even more in Brazil, making ethanol more competitive and possibly leading Brazilian plants to increase the biofuel production rather than sugar production.