Sugar prices in Brazil, the world’s largest producer, fell for a third week as the harvest advanced, according to Cepea, a University of Sao Paulo research group.
Crystal sugar, which accounts for about 68 percent of all the sweetener sold within Brazil, dropped 4.8 percent to 55.13 reais ($27.36) a bag in the week ended Aug. 17, Cepea said in a report yesterday. A bag weighs 50 kilograms (110 pounds). That was the third weekly drop as dry weather helped accelerate the harvest. Sugar cane output in Brazil’s center south, the main growing region, climbed 11 percent to a record 46.3 million tons in the second half of July, data from industry group Unica show.
“Purchasers refrained from closing new trades, due to the good advances of the harvesting and crushing activities of the sugar cane from the 2012-13 crop,” said Heloisa Lee Burnquist, an analyst at Cepea. “Buyers expect prices to continue decreasing because of expectations of an increasing supply.”
Sugar climbed 8.1 percent in June and 7.8 percent in July in New York as rains delayed production in the center south. Price have fallen 9.4 percent this month as supplies expanded. Sugar sales in Brazil were 2.6 percent more profitable than exports of the sweetener last week, compared with 2.7 percent a week earlier, data from Cepea showed. Mills are focusing on deliveries to pre-signed contracts instead of selling sugar in the open market, according to the research group.
Sugar sales in the domestic market were 38 percent more profitable than anhydrous ethanol, the kind used to blend into gasoline, and 56 percent more advantageous than hydrous ethanol, used in flex-fuel cars, it said. Both the sweetener and the biofuel are made from raw material sugar cane.
Crystal sugar has an International Commission for Uniform Methods of Sugar Analysis level of between 130 and 180, according to the Cepea website. A lower level corresponds to a higher degree of whiteness. The refined variety traded on NYSE Liffe calls for an ICUMSA level of 45.