Weekly Product Updates

W7 Sugar Update: Global Sugar Prices Dip Despite Supply Concerns and Brazilian Exports Surge

Sugar
Published Feb 23, 2024
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In W7 in the sugar landscape, global sugar prices experienced a significant decline on February 15, 2024 despite worries about potential supply disruptions in key producing regions. The Mar-24 raw sugar contract on ICE Futures in New York fell by 2.4% WoW, reaching its lowest level in a month at USD 0.23/lb. Similar trends were observed in white sugar futures on the London Stock Exchange, with the May-24 contract dropping by 2.2% WoW to USD 630.60/mt. However, Brazilian domestic crystal sugar prices rose slightly. Despite this, Brazil witnessed a surge in sugar and molasses exports in Feb-24, with significant increases in both volume and revenue compared to the same period in 2023. The average daily export volume and shipment prices also saw remarkable growth, indicating competitive pricing strategies by Brazilian exporters and efficient production processes in the country's sugar-energy sector.

Sugar Prices Fall Despite Supply Concerns in Key Producing Regions

Global sugar prices significantly declined on February 15, 2024, reaching their lowest level in a month across major international exchanges. This downward trend occurred despite ongoing concerns about potential supply disruptions in key producing regions. The Mar-24 raw sugar contract on the Intercontinental Exchange (ICE) Futures in New York fell by 2.4% week-on-week (WoW) to USD 0.23 per pound (lb), with other contracts experiencing similar declines. While recent rains in Brazil's main sugarcane belt raised concerns about potential harvest disruptions, they could also improve conditions for the upcoming season. Delays at Brazilian ports, coupled with challenges in Thailand's harvest, raised concerns about potential disruptions to global sugar exports.

White sugar futures on the London Stock Exchange (ICE Futures Europe) also witnessed a decline, with the May-24 contract falling by 2.2% WoW to USD 630.60 per metric ton (mt). In contrast to the global trend, Brazilian domestic crystal sugar prices rose by 2.05% WoW, reaching USD 30.54 per 50-kilogram (kg) bag. The price of hydrated ethanol in Brazil also experienced a slight decrease of 0.34% WoW, reaching USD 450.71 per cubic meter. Short-term concerns about supply disruptions in Brazil being balanced by potential long-term benefits from the recent rains.

Brazil's Sugar and Molasses Exports Surge in Feb-24

Data from the Brazilian Secretariat of Foreign Trade (SECEX) reveals a significant increase in sugar and molasses exports during the first ten working days of Feb-24 compared to the same period in 2023. Brazil has exported 1.79 million metric tons (mmt) of sugar and molasses so far in Feb-24, reflecting a notable increase compared to the 1.15 mmt exported in the entire month of Feb-23. The accumulated revenue from these exports reached USD 940 million, exceeding the total revenue generated in Feb-23’s USD 524.7 million.

The average daily export volume for sugar and molasses in Feb-24 stands at 179.13 thousand mt, representing a substantial 181.2% year-over-year (YoY) increase compared to the daily average of 63.70 thousand mt recorded in Feb-23. Shipment prices for sugar and molasses have also witnessed an upward trend, currently averaging USD 524.80/mt, reflecting a rise of 14% YoY. Potentially competitive pricing strategies adopted by Brazilian exporters attracting increased international buyers and efficient production and processing within the Brazilian sugar-energy sector would facilitate higher export volumes.

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