Methodology

Goal:  The ESALQ/BVMF Index for crystal sugar, which refers to the product at Santos port (no taxes; Icumsa color 150), elaborated by Cepea, seeks to express cash prices in São Paulo State, including sales in the Brazilian and international markets. The inclusion of the international market aims to observe movements in the market caused by crystal sugar exports, which involve different risks from those in raw sugar exports;
Product specification: 

Special crystal sugar, 99.7 minimum degrees of polarization, 0.08% maximum humidity, 150 maximum Icumsa color, 0.07% maximum ashes, in 50-kilo bags; 

Unit of measurement/currency: 50-kilo bag in Real or dollar - It is a simple conversion of the price in Real to dollars – commercial exchange rate, asking price at 4:30 p.m. (Brasilia time);
Delivery: equivalent to product delivered at Santos port;

                                                 

Trade features in the Brazilian market  
Reference:

Sales closed by sugar production units or trading groups in São Paulo State for delivery in the Brazilian market, cash price or current value;

Origin:

Plants or trading groups in São Paulo State, gathered in six regions according to the freight difference to Santos port;

Destination: Product price Santos port is considered;
Taxes

ICMS tax (7%) is discounted;

9.25% and IPI: 5% have not been applied to Crystal sugar since March 13, 2013, according to the Provisory Measure No. 609 from March 8, 2013.

                

Trade features in the international market:

 
Reference: sales closed by sugar production units in the central-southern region for exports, prompt-delivery (30-day deadline) cash price or current value, without taxes. These values are commonly informed as export premiums (USD/ton) added to the international quote;
Origin:

Mills in the central-southern region whose product is exported through Santos port;

Destination: Product price at Santos port, on truck, is considered.

 

Types of information used to calculate the Index: 

 
PVU at the mill with premium:

PVU at the mill with premium: freight is added to this value, considering the value informed by the collaborator. If the corresponding freight is not informed, the daily average of the region is used;

At Santos port and premium:  these two values are added;
FOB Santos with premium: loading of commodity to the ship is subtracted from this value;

 

Note: The use of values referring to asking and bidding prices is restrict to exceptionality. If there is an exceptionality (less than 5 trades in one day), supplies will only be included if there is a purchaser and a seller, the data group with the lowest spread must be chosen. This data group will be added to the index of the previous day and the average is calculated. 

 

Procedure to calculate the Index:

The use of values referring to asking and bidding prices is restrict to exceptionality. If there is an exceptionality (less than 5 trades in one day), supplies will only be included if there is a purchaser and a seller, the data group with the lowest spread must be chosen. This data group will be added to the index of the previous day and the average is calculated; 

Procedure to calculate the Index: The values in cash of trades closed in one day for prompt-delivery – for both the Brazilian and the international markets – are added to the information on freight from the origin to Santos port. Then, Cepea team calculates the arithmetic average. From this average, the standard deviation values are removed for both above and below average. With the remaining values, the final index is calculated; 
Discount rate: 

Term prices converted into cash prices by discounting CDI (Interbank Deposit Rate) rate; 

Frequency: Daily;
Historic: since January 2013;

Additional information

a) If the collected data are expressed in American dollar, the conversion to Real is made, using the Ptax rate (sale) to the closing of the day.

 

b) The price Indexes elaborated by Cepea are based on studies conducted by the research center itself, conducted daily with participants of the market to which they refer. The procedure developed for the ESALQ/BVMF Index for crystal sugar aims to collect and work with information that result in indexes that express the closest values to crystal sugar in the spot market for both the product allocated to the Brazilian or international markets.

Main application:

To be used as a reference for financial liquidation of the crystal sugar future contract from BM&FBovespa on January 28 2013. For further information on this type of contract, click here.

 

Source: Cepea

Staff

Staff

Coordinator
Geraldo Sant’ana de Camargo Barros, Ph.D
Full professor of the Department of Economics, Management and Sociology

Chief Researchers
Heloisa Lee Burnquist, Ph.D
Professor of the Department of Economics, Management and Sociology
hlburnqu@usp.br

Research Assistants

Maria Cristina Afonso

Silvia C. Michelin

Augusto Barbosa Maielli
Vanessa Vizioli