Analysis Commodities
Sugar prices down slightly after sharper rise
While fires and drought in important cultivation areas put pressure on the market and drove prices up, favorable weather conditions elsewhere provide some relief. The sugar prices on the ICE of New York and London continue to decline after a stronger increase.
By the end of August, sugar prices had risen significantly, partly driven by news from Brazil about large fires. Since then, the prices have been generally decreasing. Tuesday, New York quoted $407,19 per ton, and London quoted $518,60 per ton. These are the lowest points for both quotations since the end of August.
The estimated number of hectares affected by fires in Brazil is increasing. The Brazilian sugar association Unica announced on September 6 that based on preliminary research, at least 230,000 hectares have been affected in the important production state of Sao Paulo. Of this, over 130,000 hectares still need to be harvested. In addition, drought in Brazil continues to take its toll, leading to downward revisions in production expectations.
For 2023/24, the International Sugar Organization ISO has revised down the sugar deficit in the August market quarterly report. Previously, a global deficit of 2.954 million tons was expected. It is now a deficit of 0.2 million tons, due to improved sugar production in the main production region of Brazil. The expected deficit for the 2024/25 market year is significantly larger than for 2023/24, namely 3.580 million tons.
In India, the much higher rainfall continues to be favorable for sugarcane cultivation compared to previous years. However, India currently has no plans to lift export restrictions in the short term. This could further reduce the stock on the world market.
FAO Sugar Price Index Declines
The FAO sugar price index decreased by 5.7 points (4.7%) month-on-month in August, to 113.9 points. The decline is mainly due to improved production expectations for India and Thailand as a result of the rainfall. The relatively low international oil prices also put pressure on the sugar price because it makes it less attractive to produce ethanol from sugarcane. The fires in Brazil were a limiting factor on the decline of the FAO sugar price index.
Alex Jurvillier
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