Brazilian Sugar Prices Remain Elevated in May Due to Low Domestic Supply

Published 2023년 5월 31일

Sugar supply continues to be an issue of concern in Brazil as sugar mills deliver low quantities of white sugar to local markets. As a result, white sugar traded up in May in both major sugar markets, São Paulo and Santos. The CEPEA White Crystal Sugar Indicator (São Paulo) rose to BRL 148.79 per 50-kg bag in May, up 5.5% from BRL 141.03 per bag in April and representing a 12.8% YoY increase. For the upcoming month, domestic sugar prices are expected to remain elevated in Brazil as sugar mills continue to favour the export market.

Sugar supply continues to be an issue of concern in Brazil as sugar mills deliver low quantities of white sugar to local markets. Currently, the main priority for sugar mills is fulfilling existing contracts rather than sending sugar to the spot market. This, along with increasing demand and elevated sugar prices in external markets, has resulted in a few lots of up to 180 crystal Icumsa remaining available for immediate delivery to São Paulo, Santos, Pernambuco, and Greater Belo Horizonte. Buyers who negotiate on the spot have opted to guarantee the receipt of sugar through contracts, a trend supporting high spot prices.

As a result, white sugar traded up in May in both major sugar markets, São Paulo and Santos. The CEPEA White Crystal Sugar Indicator (São Paulo) rose to BRL 148.79 per 50-kg bag in May, up 5.5% from BRL 141.03 per bag in April and representing a 12.8% YoY increase. For the week ending May 19, the Indicator's average was BRL 149.13 per bag, up 0.29% compared to the previous week. The average price of white crystal sugar then fluctuated slightly over the past week in the São Paulo spot market, ranging from BRL 148.00 to BRL 149.00 per bag.

Source: Tridge, CEPEA

In Santos, the CEPEA indicator was up 4.3% MoM to BRL 151.35 per bag in May, a 21.5% increase from BRL 124.60 per bag in 2022 and the highest in over two years. The Indicator rose to BRL 159.50 per bag on May 9, the highest price all year. During the last week of the month, prices remained within a narrow range, between BRL 149.44 per bag and BRL 151.29 per bag.

According to Tridge's price index, sugar prices exhibited a similar trend in the Pernambuco market. Wholesale prices of white crystal sugar increased marginally during the first two weeks of May, rising from USD 0.68 per kg on May 1 to USD 0.73 per kg on May 15, a 7.4% increase. Prices then remained flat at USD 0.73 per kg till May 22, up 12.3% MoM. Similarly, in Greater Belo Horizonte, white crystal sugar traded up 13.6% MoM to USD 0.67 per kg on May 22, with similar trends experienced in Cariacica, Caratinga, and Juiz de Fora. Similar to white crystal sugar, pure cane sugar traded up in May. In Barberena, wholesale prices of cane sugar rose to USD 1.41 per kg on May 22, up 18.5% from USD 1.19 per kg on April 24, according to Tridge data.

For the upcoming month, domestic sugar prices are expected to remain elevated in Brazil as sugar mills continue to favour the export market. However, as the season progresses, we may witness a shift in the price trend as sugar production increases. According to CEPEA, sugarcane production for MY 2023/24 is forecast at 595 million tons, a 10.4% increase from about 539 million tons in MY 2022/23.