January was a period of sharp decline in the average prices of crystal sugar with up to Icumsa 150, traded in Ribeirão Preto. In January, the average trade of this type of sugar in the physical market fluctuated at BRL per 50 kg 151.74, with a very sharp decline from the December average of BRL per 50 kg 164.71. Despite this, SAFRAS & Mercado warns that in the annual comparison there was an increase, albeit weak, of 1.26%, compared to the average (adjusted by inflation) of BRL per 50 kg 149.85 (whereas nominally the average for January 2024 was BRL per 50 kg 143.68).
Furthermore, the average prices for January 2025 were only 0.16% higher than the five-year average for the same period, which currently hovers at BRL 151.49 per 50 kg, also with its prices adjusted by inflation and brought to present values. SAFRAS & Mercado warns that the 7.88% decline in the margin, when comparing the average prices for December with those for January, reflects a very peculiar market condition.
Common sense indicates that the peak of the cane off-season in the Center-South region should result in higher prices, due to the seasonal shortage in the availability of the commodity, in this case, crystal sugar with up to Icumsa 150. However, SAFRAS & Mercado warns that in addition to reading the market trend from the perspective of supply, there is also an interpretation from the perspective of demand. This is where we have the key to understanding the issue of lower crystal sugar prices in the middle of the off-season.
This is because, at the other end, we have a significant decline in demand from purchasing industries that are trying very hard to avoid as much as possible any exposure to the short-term market during the months of January and February. It is precisely due to the arrival of the peak of the off-season that mills show a tendency toward strong price volatility. An example of this is the distance between the negotiation point and the prices indicated by Cepea, where the physical market has fluctuated at around BRL 4.00 per bag below the indicator. Besides, any purchasing industry that eventually enters the physical market during January and February due to more significant supply volumes (in contrast to the pattern of punctual demand, “from hand to mouth,” as it is usually known) tends to generate a high level of price volatility, with mills significantly increasing their price offers for occasional deliveries of short-term shipments that are higher than usual.
Since seasonality indicates almost zero supply of immediate crushed product, mills tend to hold on to as much of their stocks as possible so that they last at least until April, remembering that the resumption of cane crushing in March (even if earlier than normal) will not necessarily result in an immediate increase in the supply of crystal sugar.
This is because when mills resume the crushing process they usually allocate between 70% and 100% of their cane to ethanol production as an operational characteristic common to the beginning and end of every cane crop. Therefore, SAFRAS & Mercado warns that the early start of the crushing of the new 2025/26 cane crop will continue to keep the crystal sugar market with a significant short-term supply deficit, maintaining strong downward pressure on stocks at least until the end of May, when mills will once again prioritize the production of crystal sugar after having regularized the supply of anhydrous and hydrated ethanol and VHP sugar to meet exports in the first half of the year.
In this sense, SAFRAS & Mercado also warns that the downward pressure on crystal sugar prices will be felt again from May onward, with some level of high prices and high volatility from February through April.
