CEPEA/ESALQ Index of crystal sugar averages 43.78 reais/50-kg bag in first half of June

Nevin Barich

Nevin Barich

Jun 21, 2013 – Centro De Estudos Avançados Em Economia Aplicada (Cepea)

PIRACICABA, Brazil , June 21, 2013 (press release) – The crystal sugar remuneration in the São Paulo market has been higher compared to exports since April – official beginning of the sugarcane 2013/14 season in the Central-Southern region in Brazil. In this period, international quotes were at low levels due to forecasts of global sugar surplus (10 million tons, according to ICO – International Coffee Organization) in the 2012/13 crop and the quality premium paid by the crystal sugar on demerara quotes decreased.

From early April to June 14, the domestic market remunerated 7.72%, on average, more than exports. The July/13 contract at ICE Futures dropped 5.2% and the quality premium dropped 17.31% in this period. Accounting for the São Paulo spot market, the CEPEA/ESALQ Index for crystal sugar moved up 0.67% and the real decrease against dollar quotes was 6.03%. The increase of the exchange rate could reverse the trend for exports; however, at least until the second week of June, it was not enough.

According to data from Cepea, sales in the domestic market remunerated 7.83% more than exports from June 10-14. While the CEPEA/ESALQ Index of crystal sugar averaged 43.78 reais or 20.41 dollars per 50-kilo bag, price quotes July 2013 delivery at ICE Futures. This would be equivalent to the average price of 40.60 reais or 18.93 dollars per bag. For this calculation, it was considered 95.00 dollars per ton FOB costs and 86.00 dollars per ton of quality premium.

In mid-June, in the spot market in São Paulo State, the number of crystal sugar trades for prompt-delivery was slightly higher compared to previous weeks due to the price gap between purchasers and sellers. In general, the food industry and packers expected lower values due to good advances of the harvesting and forecasts of production increase.

Some mills have decreased prices, which led the Index to return to the level of 43.00 reais per 50-kilo bag in the middle of June. From May 27 to June 10, crystal sugar trades were closed at around 44.00 reais per bag.

On June 14, the CEPEA/ESALQ Index of crystal sugar (São Paulo state) closed at 43.42 reais or 20.25 dollars (50-kilo bag), for a decrease of 2.45% in the first fortnight of June.

As for the price parity calculated by Cepea, crystal sugar remunerated 13% more than anhydrous ethanol in the second week of June in São Paulo state. For hydrous, the sugar advantage was 22% in the same period. (Cepea – Brazil)

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