Analysis Sugar
Brazilian sugarproduction down second half of july
Sugar quotations have been declining. Last week, the sugar quotation dropped to the lowest point in two years. Brazils production has been positive, and if the Indian weather forecasts are accurate, it will also benefit sugar production there.
When zooming out, a downward trend can be observed for the quotations of New York and London. Since the beginning of this year, the quotation has decreased by 14.45% in New York and 15.16% in London.
Last Tuesday, the sugar quotation dipped further: London's quotation dropped to $507.6 per ton, reaching the lowest point in almost 2.5 years, while New York dropped to $393.97 per ton, hitting the lowest point in nearly 1.8 years.
Brazil is the world's largest sugar producer, and therefore, there is a lot of reporting on the country's production. For example, the Sugar Association Unica in Brazil provides biweekly analyses on a frequent basis.
In the second half of July, Brazil processed 51.3 million tons of sugarcane in the main production region and produced 3.6 million tons of sugar. Sugarproduction was 2.2% behind last year, but also 8% higher from the beginning of the season. That last number seemed to put more weight on the marketsentiment.
In July, Brazil exported 28.5% more sugar according to data from the Brazilian Ministry of Foreign Trade, amounting 3.78 million tons.
More exports from India?
Analysts report that the Indian Meteorological Department forecasts more rainfall. If this occurs, it will boost sugar production in India. India is one of the largest sugar producers in the world. Most of the time such news has a downward effect on the quotations.
On the other hand, the export restrictions currently imposed by India seem to have a mixed influence. The Indian Sugar and Bio-energy Association (ISM) is encouraging the Indian government to allow more exports, which could push prices down. However, analysts report that India is not yet planning to lift the current export restrictions, which could further drive prices up.
Alex Jurvillier
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