Porto Alegre, August 07th, 2023 – Raw sugar in New York had a month of July marked by diverse movements between the short and medium term. While in the margin (in comparison to the previous month) the average prices of October/23 had a decline of 2.45% (with an average of 24.00 cents) year over year, prices still show an appreciation of 29.78%, very close to what was seen in the annual comparison of the previous month, as the June averages remained with an advantage of 29.23%. This is due to different short- and medium-term vectors on the part of fundamentals.
In the short term, we have the negative influence of the progress of the current 2023/24 crop in the Center-South of Brazil, which has evolved quickly with a climate without rain and favorable to cane crush since the beginning of the third week of June. The weather maps monitored by SAFRAS & Mercado show that the weather should remain like this at least until the end of the second week of August. Based on this, there were two revisions in SAFRAS & Mercado’s estimates for the volume of cane to be processed this season.
In January 2023, SAFRAS & Mercado released its first estimate pointing to a volume of 565 mln tons at the end of the 2023/24 crop, which had not yet started, against 524 mln in the previous season. In April, SAFRAS revised this data, raising it to 278 mln tons with the rains seen throughout the first half of that month. At the end of June, the rains in the first half of this month, together with the expectation of new precipitation in August and September, led S&M to carry out a second upward adjustment to the range of 585 mln tons of cane.
It is in this context that prices have shown some lows in the short term due to the regular progress of cane crushing in the Center-South together with recent rains that benefited many cane fields. However, the same cannot be said about Asia, mainly Thailand, where the accumulated rainfall volumes up to July in the current monsoon season have shown a deficit of 28% from the long-term historical average. This puts the country again under the prospect of a decline in production from 12 to 9 mln tons in the region’s 2023/24 season, which begins in October this year. This explains why, even with a retreat in the margin, prices are sustained over the year with levels of growth above two digits, which can also be observed about the five-year average for the same period.
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