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Sugar and Ethanol Daily Report

By: Marcelo Bonifacio, Market Intelligence Analyst

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Sugar trades sideways, with climate perspectives in focus

The most liquid contract for raw sugar (NY #11) closed virtually unchanged at US¢ 15.12/lb, with no significant variation during the session, one day after reaching the intraday high in almost two months of US¢ 15.39/lb. In London, LDN#5 dropped 0.4%, closing at USD 478.60/t. The white premium remains at a high level, around USD 145/t, signaling persistent demand for refined sugar in the spot market. The absence of a new directional driver kept sugar in consolidation mode, while other commodities in the softs complex — coffee and cocoa — dominated trading session attention.

The factor sustaining the current price level remains the expectations surrounding a very strong El Niño, with the latest estimates pointing to a high probability of the climatic event occurring in the fourth quarter. On the other hand, the drop in oil prices after the sharp increases recorded yesterday contributed to limiting further sugar price advances. In Brazil, the CNPE meeting that could raise the ethanol blend rate was postponed again, with no new date set.

NY #11 Sugar Intraday, October SBV26 Contract (US¢/lb)

image 133995

Source: ICE-US. Design: StoneX.

Overview

The U.S. Climate Prediction Center raised the probability of a very strong El Niño to 81% for the October-December quarter, keeping the market attentive to climate risks for sugarcane crops in Brazil and India. In the short term, although the adverse impact of the phenomenon has diminished in recent days, risks to harvests have not yet dissipated.

  • What to expect:

  • In the coming weeks, the market will be monitoring: (i) UNICA’s biweekly data on crushing and sugar/ethanol mix in the Center-South, with the next release expected in mid-July; (ii) updates from the IMD (India Meteorological Department) on monsoon progress in sugarcane-producing states; and (iii) a potential new date for the CNPE meeting on ethanol blending. 

INDICATORS

image 133996

Sources: ICE, CEPEA, B3, ANP, NYMEX, CBOT, Central Bank of Brazil, California Air Resources Board (CARB), CONSECANA, StoneX. Design: StoneX.
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  • Sugar

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