Porto Alegre, November 11th, 2024 –The month of October was a period of increase in the premiums for crystal sugar (for a 50-kg bag with up to Icumsa 150 based in Ribeirão Preto) over the average prices of anhydrous and hydrated ethanol (when converted to the equivalent of BRL/50 kg of crystal sugar with up to Icumsa 150) where the sugar advantage went from +53.83% to +70.96%. This increase of just over 17% in sugar premiums between the months of September and October made the period one of the moments with the best pricing level for crystal sugar over the average prices of anhydrous and hydrated ethanol, losing only to the months of January (+103%), February and March, with respective premiums seen until then of +88% and +85%.
Basically, crystal sugar had strong levels of advances in its trading prices on the physical market, while anhydrous and hydrated ethanol showed declines when their trading prices on the physical market were converted from reals per liter to reals per 50-kg of crystal sugar, equivalent to Icumsa 150. From September to October, crystal sugar rose 7.14%, while anhydrous and hydrated ethanol fell by 3.47% and 3.70%, respectively. This ended up causing this 17% jump in crystal sugar premiums.
Last month, SAFRAS & Mercado estimated average crystal sugar premiums at 65%, which ended up being 5.9% lower than the effective data for the period. The big detail is that sugar had stronger gains than expected due to the reduction in the raw material for its production, which contributed to its higher prices. On the other hand, ethanol saw sharp increases in cane availability for its production, still an effect of the fires in August and September. As a result, its supply became more comfortable and its prices were negatively pressured.
For November, SAFRAS & Mercado expects higher prices for hydrated ethanol, with average gains expected at 7%, with hydrated ethanol rising 8% and anhydrous ethanol 5%. On the other hand, sugar will keep having upward movements, albeit at a lower intensity than that seen in October, only achieving gains of 3%. This should occur because the strong gains in crystal sugar seen in October saturated the market and scared away short-term purchases by industries. Therefore, according to SAFRAS & Mercado, even if prices remain bullish as the season progresses towards the off-season, these levels of appreciation tend to be lower.
And it is precisely because of this difference in the growth pattern of ethanol and sugar that the premiums for the same predicted for November by SAFRAS & Mercado should fluctuate by 64%, well below the 70% seen in October.
Besides being 17% higher than in September, the premiums for October were almost 23% higher than the five-year average for the same period, which currently fluctuates at 48%. Nevertheless, this year we have a 23% decline in the premiums for October compared to the same period last year, when until then premiums fluctuated at 94%.