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Brazil's record sugar harvest will lead to lower prices: traders and analysts expect a more affordable product.
agricultural products
Sugar

Brazil's record sugar harvest will lead to lower prices: traders and analysts expect a more affordable product.

In Brazil, a record sugar harvest is expected for the second year in a row, which will lower prices due to increased production and exports. This will ease the product shortage in Asia and the Middle East but increase the market's dependence on Brazil due to reduced supplies from India.

Globally, a small sugar surplus is expected in the new season.

23 June 2024 23 June 2024

In the largest sugar-exporting country, Brazil, traders and analysts at meetings in New York talk about the second consecutive year of record harvest. This will lead to a decrease in prices for this product. Thanks to favorable weather conditions and an increase in planting areas, this year processors sent more sugarcane for sugar production, rather than for ethanol production as usual, Bloomberg reports.

An increase in exports from Brazil in the coming months will alleviate concerns about a supply deficit after a five-year price increase, which was the longest since 1989. This will ease the situation for importing countries in Asia and the Middle East, which are still facing a product deficit.

It is expected that the main sugarcane production region in the central part of southern Brazil will produce between 41 and 42.5 million tons of sugar, approaching the absolute record. This year, sugarcane planting areas also turned out to be higher than expected, exceeding by 3-4%.

Nevertheless, the market's dependence on Brazil is increasing, especially as exports from India are expected to decrease until the second half of 2025. This poses risks, especially considering that the majority of Brazilian sugar is shipped through only one port.

At the global level, only a slight surplus of sugar is expected, amounting to 1.6 million tons in the new season, which is not critical against the backdrop of historically low world stocks.

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