For most of 2023, the difference between the prices of Brazilian crystal sugar destined for the domestic market and the prices of export sugar (raw) was in negative territory, considering the differentials related to freight, port costs and export premiums.
The large volumes produced by the 2023/24 crop (Apr-Mar), which up until its penultimate two-week period had produced 42.2 million tonnes of sugar (an annual increase of 25.8%), as well as the bullish dynamics on the international sugar market for most of the year, allowed Brazilian exporters to experience a scenario with a large advantage compared to previous years, with the difference between 150ic cepea/ESALQ crystal and #11 raw sugar at comfortably negative levels for most of the year.
Export basis 150ic sugar (CEPEA/Esalq - NY #11, BRL/bag)
Given the favorable scenario for exports, with the basis in negative territory and record national sugar stocks, 2023 recorded the highest volume of exports ever for the country, reaching 31.37 million tonnes, 26.2% above the five-year average. Against this backdrop, Brazil's large export volumes were another major bearish factor on the market, which overestimated the logistical limitations of exporting the Brazilian commodity through ports.
With regard to the basis measure, however, it is worth noting that since December 2023 - a period marked by India's announcement of a ban on ethanol production from sugarcane, followed by a drop of more than 20% in raw sugar #11 in a few weeks - it started operating in positive territory for the first time since July 2023, as a result of Brazilian crystal sugar's less volatile response to the drop in international prices.
Considering the period since the high in raw sugar #11 prices ( November 6, 2023), when the front-month contract reached US¢27.95/lb, the accumulated drop in raw sugar was 20.1%, while CEPEA crystal sugar has fallen by around 10% since then (when adjusted for the variation in the dollar), a fact that has been reflected in the variation in the basis since then - a measure that currently stands at just 1.4 BRL/bag.
Crystal 150ic (axis, left) and raw #11 US¢/lb 
Source: Cepea. Design: StoneX.
Despite this, it is worth noting that monthly sugar volumes continued to maintain record volumes at the end of 2023 and beginning of 2024, given the high availability of export sugar. According to a survey by the Ministry of Agriculture (MAPA), stocks of VHP sugar were more than 98% above the annual comparison at the end of February/24.
Given this scenario, the role of the Brazilian Center-South as the main supplier of sugar to the international market should continue to be the focus of the market's attention in 2024, as agents seek to absorb the extent of the weather impact on the recently started 2024/25 crop (Apr-Mar) and its result on the country's export capacity.
Daily recap
At the time of this writing (03), raw and white sugar prices recorded a mixed closing day on the exchanges, ending the trading session at US¢ 22.22/lb for raw SBK4 (-0.45%) and US$ 647.7/t (+0.59%) for white SWK4. Influencing the trading sessions, it is worth mentioning the higher than expected crops in India and Thailand, while apprehension remains on the downside due to the request by the Indian Sugar Mills Association for the release of an export quota of 1 million tonnes of sugar in 2023/24 (Oct-Sept).
