Sugar sets new delivery record in March

Last week's UNICA report was in line with Hedgepoint Global Markets' and market expectations, with no price movement. The Center-South crushed only 245 thousand tons of sugarcane, producing 7 thousand tons of sugar and 381 million liters of ethanol, lower volumes than in 23/24, typical of the off-season.

UNICA director Luciano Rodrigues highlighted that the higher ethanol production in 24/25, both from sugarcane and corn, reduces supply risks in the domestic market. This reinforces the projection of a robust sugar harvest in 25/26 and indicates a possible downward trend in sugar prices in the medium term.

According to Lívea Coda, Market Intelligence Coordinator at Hedgepoint Global Markets, “last week’s volatility was therefore not caused by the UNICA report, but rather by the early expiration of the March contract. The market was already showing signs of overbought on Monday (24), which indicated possible corrections, aggravated by an adverse external scenario, with a drop in the energy complex and a stronger dollar.”

With relative neutrality in negotiations on Tuesday (25), Wednesday (26) saw a 3,8% drop in sugar prices in a consolidation movement, followed by a 4,6% reduction on Thursday (27), when rumors of active sales by Brazilian producers emerged.

Expectations of high deliveries for the March contract — between 1 million and 1,5 million tonnes — raised concerns about supply constraints. In the end, 1,7 million tonnes were delivered at 19,51 c/lb, a record that surpassed the 1,3 million tonnes in March 2024.

May contract

The May contract should be monitored in its early sessions to understand price trends. Supply in Brazil has become tighter and should continue to decline as the off-season ends. Sugar production in India and Thailand is below initial expectations and, as these are countries with higher production costs, the combination helps to support prices in the short term.

“While we remain somewhat optimistic that India can reach 30 million tonnes, its production is 14% below last season (total of 21,9Mt as of February 28), which could result in a larger global deficit for 24/25. However, trade flows should not be affected as 1Mt has already been permitted,” the analyst notes.

Thailand: production of 10,5Mt

“We have revised our expectations for Thailand’s sugar production from 11Mt to 10,5Mt due to adverse weather conditions for milling, which limits its exports to at least 800kt compared to initial estimates, and ends up making the market tighter in the short term,” it indicates.

The start of the Brazilian Center-South harvest may be slow or delayed, supporting the May contract. However, if demand is comfortable waiting for the next Brazilian harvest, this recovery in prices may be slower.

For example, Indonesia has yet to decide when it will import the approved 200kt, while data from China shows that imports through December last year fell by 36% for sugar and 24% if estimates for syrup and smuggling are included.