Uncertainties press down quotes in the Brazilian market

Cepea, March 18, 2020 – Economic uncertainties worldwide have the number of deals closed in the sugar market of São Paulo State in the first fortnight of March, pressing down quotes. On March 10, the CEPEA/ESALQ Index for crystal sugar (Icumsa 130-180 – São Paulo) resumed closing at around 78.00 BRL/bag in SP State.

 

However, the end of the offseason period in central-southern Brazil limited devaluations, since the current sugar availability in the spot market is significantly low. Still, between March 9 and 13, the Index averaged 79.68 BRL (16.74 USD) per 50-kilo bag, 1.5% down compared to that in the week between February 24 and 28 (80.92 BRL/bag).

 

At the New York Stock Exchange (ICE Futures), demerara sugar prices were influenced by the global outbreak of coronavirus. Until March 13, prices had dropped 15.3%, returning to around 11 cents of dollar per pound.

 

Drastic measures taken by some countries should influence the economy worldwide, which has led investors to migrate from commodities to safer assets, such as dollar. This scenario has sharply lowered the demand for commodities, pressing down sugar quotes. Oil prices are fading too, due to issues between Russia and Saudi Arabia.

 

Between March 2 and 13, oil prices dropped 34.78%. It is worth to mention that oil prices at lower levels reduce the competitiveness of ethanol against gasoline, increasing sugar production and, consequently, pressing quotes down.

 

(Cepea-Brazil)

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