Sugar increases physical gains in February


    The high level of commitments with VHP together with high prices of hydrated ethanol formed a scenario of sharp increase in the prices of crystal sugar with Icumsa 150 in February. The most recent data on monthly average prices of crystal sugar with up to Icumsa 150 in the Brazilian physical market, on the average of the interior of São Paulo, show a new acceleration in the prices of this product.

    Besides the off-season peak, crystal sugar finds support in the high volume of commitments with VHP sugar for the next two off-seasons. For 2021/21, which starts now in April, nearly 90% of the export expectation of 34 million tons are already committed. As for the subsequent season, 2022/23, we already have a standard of 50% of sugar set for the export expectation of 33 million tons. To further reinforce the scenario of higher prices for crystal sugar, we have sharp highs of hydrated ethanol, which, from one week to the other, rose from the flattened level of BRL 2.60 to around BRL 3.20 per liter.

    Finally, it is interesting to mention the crystal sugar stocks in the Center-South, which, in the most recent volumes, until the end of January, were at 3.219 million tons for crystal with up to Icumsa 180. This volume is 18.97% above the same period in the previous year, at 2.705 million tons, but 16.23% below the previous month, when crystal stocks were at 3.84 million tons. Against the 5-year average of 2.65 million tons for the same period, the recent volumes are 21.06% higher. In the Northeast region, the stored volumes of crystal sugar amount to 240.196 thousand tons, down 19.83% YoY (against 299.59 thousand tons in January 2020). In the margin, there is an increase of 7.51% over the 223.410 thousand tons seen in December 2020. Against the 5-year average of 259.440 thousand tons for the same period, recent volumes are 7.42% lower.

    Analyzing the historical comparison with already deflated data, we observe that, in February, the average trading price of a 50-kg bag of sugar with up to Icumsa 150 was BRL 106.94 in Ribeirão Preto. In comparison with the same month of the previous year, there was an increase of 30.26% over the average of BRL 82.10 per bag. Despite the strong annual gains, there was a much less intense appreciation in the margin (1.26%) when compared to the average of BRL 105.62 in January 2021. Expanding the analysis scope, we see that the average price of February this year is 29.08% above the average price for this period over the past five years, already deflated, which is currently around BRL 82.85.

    In the previous month, current prices had been 24.77% above the average of the last five years for the period, which until then fluctuated by BRL 84.65. As a result, the average price of the last five years between January and February dropped by 2.12%, in sharp contrast to the increase observed in the annual comparison, where current prices showed very significant gains of over 30%. With this, we can interpret that there was a negative detachment from the current price level and its historical average.

    For February, SAFRAS & Mercado expected prices of around BRL 104.00, which were 2.75% above the effective average price for the period of BRL 106.94. For March, SAFRAS & Mercado expects average prices of around BRL 108.00, which must mean an annual increase of 30.44%, a high in the margin of 0.99%, and a 39.85% advance in the five-year average for the same period.