The main spread between the two most active raw sugar futures contracts widened this week due to forecasts of slowing exports from Brazil, which, according to Bloomberg, will lead to a shortage of supply in the market in the near future.
The March contract prices fell by 2.2% and currently significantly exceed the price of the May contract, reaching a one-year high. According to expert Claudiu Covrig, the deficit will be particularly felt at the end of the year and the beginning of the next, as Brazil reduces export volumes, while Thailand will only start harvesting, prompting Thai producers to increase production in the first quarter of 2025.
According to reports, drought in Brazil has led to a decrease in the yield of sugarcane, raising concerns about the premature end of the harvesting season, in sharp contrast to the previous season when rains allowed Brazil to continue exports until the end of the year. Meanwhile, refined sugar prices remain under pressure amid forecasts of increased production in Europe.