Sugar increases 34% YoY in August in brazilian physical market


The physical sugar market had a month of August marked by new acceleration over the trading averages of crystal sugar with up to Icumsa 150 traded in the interior of São Paulo. The advances reached almost 45% year over year and 4% in the margin.

At the end of August, it was possible to observe a strong appreciation movement in the negotiations with crystal sugar with up to Icumsa 150 on the average of the interior of São Paulo where, between the first and the second half of the month, prices quickly jumped from a very stabilized range of around BRL 79.00 to highs at the end of the period at BRL 83.00. Several vectors sustained these highs, which exceeded SAFRAS & Mercado’s expectations for the period. The first vector, widely anticipated by SAFRAS & Mercado, was the strong reduction in the availability of this sugar, which ends up competing in the mix of mills with VHP and hydrated ethanol.

VHP sugar has been highly demanded in the current 2020/21 crop and also in the 2021/22 season. At the end of July, all expected exports of VHP for the current season were already 100% met. At the end of the first half of August, about 5 million tons of VHP for 2021/22 were also already sold. With the strong heating of the VHP market, crystal sugar found the first of its two main competitors. The second is hydrated ethanol, which is already experiencing strong increases during the second half of August, helping absorb the supply of cane for crystal sugar. As if this were not enough, the outlook for better prices for hydrated ethanol in the off-season of the Center-South ends up leaving mills highly inclined to manufacture the biofuel after complying with the VHP export contracts.