Lower production in 2021/22 boosts prices, and Index sets a record in BR

Cepea, September 2nd, 2021 – Amid lower production in the 2021/22 season, the prices for crystal sugar increased in the spot market of São Paulo State (SP) in August, majorly late in the month, when higher demand pushed up values even higher.


In general, agents from the industry, packing companies and wholesalers were interested in closing deals in the spot of SP, increasing liquidity. In that scenario, the CEPEA/ESALQ Index for crystal sugar hit 137.36 BRL (26.54 USD)/50-kilo bag on August 31, a nominal record in the series of Cepea.


Between August 1st and 31, the CEPEA/ESALQ Index for crystal sugar averaged 128.42 BRL/bag, 10.3% up from that in July/21.


The production decrease in the 2021/22 season is limiting crystal sugar supply in the Brazilian spot market, which is the major reason for the valuations. According to Cepea surveys, the volume sold (spot mkt and contracts) by the sugar mills from SP this season (Apr/21 – Jul/21) is 6% lower than that traded in the same period last year. According to Unica (Brazilian Sugarcane Industry Association), sugar production in SP between April and July was 11.03% lower than that in the same period last year.


Sugar exports have been influenced by lower production in the current season. From April to July, Brazil exported 9.464 million tons of sugar, according to Secex, 6.14% down from that shipped in the same period last year (10.083 million tons).


Abroad, prices for demerara sugar were influenced by the unfavorable weather in central-southern Brazil. The long period of drought and frosts in that area reduced the productivity of sugarcane crops. According to estimates from Czarnikow traders, sugar production in central-southern Brazil is expected to total 32.5 million tons, less than that forecast in June (34.1 million tons).


For the coming world season (2021/22), a report released on August 27 by the International Sugar Organization (ISO) estimates a global sugar deficit of 3.8 million tons, against 2.6 million tons forecast in May. For the current world season (2020/21), ISO estimates a deficit of 1.5 million tons, against 3.1 million tons previously forecast.





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