Porto Alegre, March 4th, 2024 – Sugar stock data made available by MAPA for the end of January this year showed an atypical upward movement in VHP volumes in the Center-South compared to December last year. Between December and January these volumes jumped 17.96%, going from 8.34 to 9.84 mln tons. By way of comparison, in the same period, crystal sugar stocks with Icumsa 0 to 180 showed the opposite variation, with a decline of 20.17%, going from 4.34 to 3.46 mln tons, also accumulated in Brazil’s Center-South.
The reason for the strong and atypical increase in VHP volumes in Brazil’s Center-South was the low rainfall in the region, which allowed mills to continue the cane harvesting and grinding process. They took advantage of such conditions to produce more VHP and store the product to more comfortably meet export contracts with shipments throughout the first quarter of the year, a time that is usually rainier in the Center-South, with a decline in production volumes and greater pressure on carryover stocks.
Furthermore, the lower prices of hydrated ethanol since the end of the fourth quarter of the previous year also motivated mills to direct the cane that was harvested in January to VHP, with these prices remaining above their long-term historical pattern, benefiting external commitments, which also demands high volumes of stocks for shipments during the off-season.
SAFRAS & Mercado predicts lower levels of growth in VHP stocks in February, given the heavier rain seen in the second half of the month. As the first half of February also had little rain, stocks may continue to grow at a lower intensity during this period.
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