Crystal sugar ends 2023 with a cumulative decline of 2%

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     Porto Alegre, January 11th, 2024 – The 2023/24 cane off-season is proving to be markedly atypical for the Brazilian sugar market. On the one hand, mills remain firm in their crushing process, keeping supply high and bringing down prices. On the other, industries hold back their purchases, restricting supply from mills and reinforcing the scenario of lower prices. As a result, the month of December, which was supposed to be the beginning of the off-season, ended up being a period of continuous crushing, lower prices, and repressed volumes of sugar stocks, which contributed to the maintenance of the negative scenario for the commodity prices.

This is the context for crystal sugar with up to Icumsa 150, with its price averages falling both at the end of 2023 and in the month of December. Cumulatively last year, crystal sugar had an overall average of BRL 144.50 per 50-kg bag. This value was 2.11% lower than the 2022 average, which, adjusted by inflation, hit BRL 147.61. In nominal terms, prices were BRL 134.12, which would even reverse the negative vector for the year if we did not consider the annual inflation, which until November 2023 oscillated at 4.04%. In December 2023, the trading average of sugar prices was BRL 151.56.

This average also showed weakness in the short term, with a decline of 0.79% over the year, compared to the average of December 2022, also adjusted by inflation at BRL 152.76, with nominal prices at the time at BRL 138.80. In the margin, sugar also had lows of 2.46% against the average of BRL 155.38 in November 2023. Only against the five-year average for December did sugar have gains against the prices of BRL 144.41, up 4.94%. The five-year average was also adjusted by inflation.

For January, SAFRAS & Mercado warns that cane crushing will be forcibly interrupted due to weather reasons. The expected monthly accumulated rainfall over the cane fields in the Center-South must be torrential, above 350 mm (for more information see our monthly report on accumulated rainfall in the Center-South published by our consultancy service). With this, one of the three vectors that have kept crystal sugar downward will be neutralized, which is the continued growth in short-term supply.

However, the market will not yet have a solid basis for recovery as buyer industries will still be operating little by little in the market, and carryover stocks will continue to be depreciated (for more details see the monthly report on crystal sugar and VHP stocks in the Center-South, also published by our consultancy service). Therefore, crystal sugar in the physical market will only have the basis to start recovering from February, when industries resume purchases, just before Carnival, to replenish their medium-term intermediate stocks and form new supply contracts for the second quarter of 2024.

It is in this context that for January 2024, SAFRAS & Mercado estimates average prices for crystal sugar in Ribeirão Preto at BRL 149 per bag, down 1.69% from the average of BRL 151.56 in December 2023 and annual gains of 6.66% compared to the average of BRL 139.69 in January 2023, besides a 20% increase over the five-year average for the same period, also deflated at BRL 123.66.

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