World Sugar Market – Weekly Comment – Episode 92


The sugar market played an important role this week with July/2023 closing out Friday’s session at 24.74 cents per pound, a 63-point downturn or almost 14 dollars per ton. The real appreciation against the dollar in the weekly accumulated, though only 0.5%, helped prices shrink by more than R$100 per ton.

The sugar curve in NY flattened about 60 points in the months related to the 2023/2024 crop of the Center-South, shrank 6 points on average in the 2024/2025 crop and appreciated 20 points on average in the 2025/2026 crop. The perception of a smaller interest rate in Brazil and the possibility of an increase in the interest rate abroad decrease the amount of real offered along the curve, which demands a higher break-even price in cents per pound down the road. That’s our take on it.

The total accumulated of crushed sugarcane in the first two weeks of May, according to the UNICA report, was 79 million tons, a volume 24% above that of the same period last year, but still smaller than that of the six previous crops. The accumulated sugar production grew 48%, while the pro-sugar production mix went up 7%, from 38.50% last year to 45.61% this year. And it should hit 48%.

The sugar value traded at the NY exchange converted into real by the rate published by the Central Bank and adjusted for the inflation rate, closed out Friday at R$2,816 per ton, almost R$150 per ton below the average seen in May. As we said here last week, the market will need fresh and delicious news to be able to keep this level of high prices. For now, there isn’t any.

The non-index funds have started to get rid of their long positions. Last week, according to the COT (Commitment of Traders), published Friday based on the previous Tuesday’s position, they have already liquidated 28,698 contracts. The market corrected only 47 points with this exit. If they settle 50,000 contracts, might we see a drop of more than 100 points in NY? I don’t doubt it, and how about you, dear reader?

Note that the 50-day average of the NY closing is at 24.52 cents per pound, while the market hit 24.57 cents per pound on Friday. This can be a sensitive point for the funds. A sharp fall at this level can trigger a new wave of liquidation. But, if you have fixed your sugar prices in real per ton and bought a call 150-200 points above, you have no reason to worry. But, if you haven’t fixed anything and is waiting on NY to get to 30 cents per pound or R$3,500 per ton, you’d better increase the stock of offerings for your favorite saint.

The bulls can only truly believe in climate stresses (read El Niño) for NY to be able to stay on these levels. Meanwhile, oil and gas continue slipping this week, putting even more pressure on hydrous with the real appreciation and the mills – as we have seen in the UNICA report – turning the key to maximize sugar production. Where is the deficit?

What we see and hear out there is that the market is starting to adjust the crushing forecast of the current Center-South crop upward. A number superior to 600 million tons is already consensual. And the sugar production that some people estimated at 37 million tons starts to approach 39 million tons. Where is the deficit?

Therefore, the bulls can only expect that the temperature will get to 50° Celsius in Thailand, that El Nino will come in full force, that the rain will interrupt the crushing in the Center-South, that the port will get jammed with the super grain crop, that there will be a perfect storm so that the bulls can celebrate in high style. Be careful – there is a bear on the watch.

You all have a great weekend.

To read the previous episodes of World Sugar Market – Weekly Comment, click here

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