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Low supply in the spot of SP underpins sugar prices

 

Cepea, October 4, 2021 – Crystal sugar prices continued to rise in the spot market of São Paulo State (SP) in September. On Sept. 23, the CEPEA/ESALQ Index for crystal sugar hit 145.46 BRL per 50-kilo bag, a nominal record in the series of Cepea. Purchasers reported difficulties to find sugar available in the spot market. Thus, between Aug. 31 and Sept. 30, the CEPEA/ESALQ Index rose by 3.7%, closing at 142.50 BRL/bag (26.21 USD) on Sept. 30.

 

The current season (2021/22), which has been marked by a severe drought and frosts in some Brazilian regions, may end earlier than usual, extending the offseason, which may underpin sugar prices in the coming months.

 

And the weather may continue to disfavor crops in Brazil. According to forecast from Inmet (Brazil’s National Institute of Meteorology), there is a 70% chance of La Niña during the Spring in the country. Therefore, rains are expected to continue below the average in southern Brazil as well as in some areas of SP and Mato Grosso do Sul. On the other hand, in the central-western and northern regions of the country, rainfall may be higher than the average.

 

Abroad, the prices for demerara sugar dropped at ICE Futures in late September, influenced by the recent US dollar appreciation against the Real. However, there is still an upward trend of prices in the international market: with the recovery of the Indian market, the supply of sugar for exports decreased; besides, sugar production has been low in Brazil. According to Unica, in the current season (2021/22 – from early April to Sept. 1st), 53.73% of the sugarcane processed was allocated to the production of ethanol, and 46.27%, to sugar production.

 

(Cepea-Brazil)

 

 

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