Restricted supply guarantees new prices increase

Brazilian sugar prices kept moving up during the first fortnight of July. Besides the limited supply, even with the harvest period, the high levels in the international market and the increasing ethanol quotations contributed to support the domestic sugar values.

The CEPEA/ESALQ Index for crystal sugar (Sao Paulo state) averaged 27.33 reals or 17.21 dollars per bag of 50 kilos on Jul 15th, increasing 4.11 percent in Real over June 30th. Mills remain focused on accomplishing export and domestic contracts and on the ethanol production. Buyers, in turn, keep trading small volumes.

Regarding the price parity calculated by Cepea, the anhydrous ethanol remunerated 13 percent more than the sugar between Jul 7th and 11th. In relation to the hydrated, the sugar kept remunerating more, in 2 percent. In the same period, exports remunerated 5 percent more than domestic trades (Sao Paulo state), according to Cepea.

The International Sugar Organization forecasts the global sugar production of the 2008/09 crop, which starts in October, at 165 million tons, below to the volume estimated to the 2007/08 crop (until September), of 169 million. The consumption, which should total 161 million tons in the 2007/08 crop, is estimated at roughly 165 million next season.

According to the Sao Paulo Sugar Cane Agroindustry Union (Unica), until the end of June, 140.6 million tons of sugarcane from the 2008/09 crop were processed in the Center-Southern region, volume 4.4 percent higher over the same period of the last season. (Cepea - Brazil)

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