September 28, 2015
EconoTimes | http://goo.gl/3s6m1u
In the most active contract with a March 2016 maturity date, raw sugar increased by 4.6% in price to 12.4 US cents per pound on Friday. As the week drew to a close, the raw sugar price was given a considerable boost by the latest Brazilian sugar production figures from the Brazilian Sugarcane Industry Association (Unica). The data showed that 33% less sugar was produced in the main Center-South growing region in the first half of September as compared with the same period last year, notes Commerzbank.
One reason for this was heavy rainfall which made harvesting of sugar cane more difficult, with the result that 26% less sugar cane was processed. In turn, a larger proportion of the total was turned into ethanol rather than sugar than was the case last year. This has also been the case for the entire season ever since April, and is one major reason why sugar production in 2015/16 has so far fallen 11% short of last year's figure, said Commerzbank.
The fact that a lot of rain is also forecast for the next few weeks suggests that further delays to harvesting are likely, and gives rise to fears that the cane sugar content may further deteriorate. Against this backdrop, the global deficit for the 2015/16 season that has already been being predicted for months now appears increasingly realistic.
The Brazilian real has strengthened again somewhat of late - for months, its massive depreciation has been driving down the sugar price. How it performs in future will partly determine whether the sugar price will be able to continue the upswing it has enjoyed since hitting a seven-year low a month ago.