2024-03-21 23:02:52
The next Brazilian sugar campaign is due to start in a few days. Its first results are awaited with excitement: it is once again Brazil which will set the pace on the market for the coming year.
All eyes are now on Brazil, the world’s leading producer and exporter: the country’s market share has increased since India restricted its volumes, decided on international trade, depending on the month, Brazil provides between 70 and 80% of sugar exports. Some experts do not hesitate to speak of “ overdependence » from the market to Brazilian production.
While waiting for the imminent start of the next campaign, traders are considering the best and the worst. However, a difference of a few million tonnes alone can tip the world balance towards a sugar surplus or deficit.
Ethanol is no longer popular
« Episodes of severe drought in Brazil have created anxiety and stress » summarizes Timothé Masson, general secretary of the World Association of Beet and Sugar Cane Planters, who expects that “ the first results of the Brazilian campaign are making noise ».
However, we will have to wait several months to confirm the volumes of sugar that will be marketable internationally, because exports also depend on the quantity of cane that will not be transformed into sugar, but allocated to the manufacture of biofuel. “ The sugar market is so profitable that the share of cane dedicated to ethanol could still be minimal this year » explains Karim Salamon, chief analyst at Wilmar Sucre: ethanol sells for between 13 and 14 cents per pound while sugar sells for 8 cents more, or around $170 difference for a ton. A gap which argues for a maximum of Brazilian sugar dedicated to export in the coming months, which would, if this were the case, partially compensate for a possible drop in the harvest.
The Indian and Thai stranger
Whatever happens in Brazil will likely still affect sugar prices in New York in 2024 and 2025, but Thailand and India could release more export volumes than expected due to better production than expected. They could then count in the balance of world prices. Good news which, if confirmed, will relieve the market.
In the meantime, all scenarios remain open, including that of a major deficit of more than 4 million tonnes for the next campaign, a deficit put forward by the trader Sucden, as reported by the French sugar beet union, the CGB.
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