Porto Alegre, December 06 th, 2021 – Data show Brazil’s Center-South region is already at a pace of consumption of stocks of crystal sugar with Icumsa 150 and 180, which sustains prices in the short term through supply reduction. The most recent data on average sales of crystal sugar with up to Icumsa 150 traded on the average of the interior of São Paulo show two relatively dichotomous short-term scenarios. On the one hand, we have the maintenance, albeit to a lesser extent, of the pattern of strengthening of the average price of this product, reinforcing a scenario that has been seen throughout 2021. On the other, the market, in practice, has seen a sharp decline in traded volumes and overall demand for the commodity. However, these two issues bring nothing new to surprise the market, as it is already usual in off-season periods that the market works with both higher prices and small volume of negotiations.
The most recent data from Unica show that 70% of the 256 mills that operated during the current season already finished their milling at the end of the first half of November. This reinforces the maintenance of this characteristic market pattern of an off-season that occurs 40 to 60 days before the start of the calendar. A large part of sugar-buying industries carried out their supply contracts from July to August this year. Few have been active in the market since October. Despite this, the Center-South has already entered its mode of consumption of stocks, and no longer in formation, still at the end of October, which helps even more to sustain domestic prices, which base their gains more on the reduction in supply availability than in demand, now in low season.
In this context, analyzing the historical comparison with already deflated data, we observe that, in November, the average trading price of a 50-kg bag of sugar with up to Icumsa 150 in Ribeirão Preto was BRL 153.31. In comparison with the same month of the previous year, there was an increase of 30.62% over the average of BRL 117.37 per bag, already deflated. In the margin, there was an appreciation of 5.51% from the average trading of BRL 145.31 observed in October 2021. Expanding the analysis perspective, we see that the average price for November this year is 51 .08% above the average price for this period for the last five years, already deflated, which is currently around BRL 101.48.
In the previous month, current prices had been 55.74% above the five-year average for the period, which, until then, fluctuated at BRL 93.31. With this, the five-year average price between October and November showed an appreciation of 8.76%, in line with the advance observed in the margin, where current prices increased by 5.51%.
For the month of November, SAFRAS & Mercado was expecting prices around BRL 150.00, which was 2.16% below the effective average price of BRL 153.31 for the period. For the month of December, SAFRAS & Mercado expects prices around BRL 155.00, which should mean an annual increase of 27%, an advance in the margin of over 1%, and a 57% increase over the five-year average for the same period.