CEPEA/ESALQ Index of crystal sugar closes at 51.78 reais/50-kg bag, up 0.6% from Feb. 28

Nevin Barich

PIRACICABA, Brazil , March 19, 2014 (press release) – Crystal sugar prices continued firm in the spot market in São Paulo in early March, despite the significant international price drop. However, the volume of trades remained limited, because of the sugarcane off-season period in the Central-South Brazil. Only a few mills started the crushing to, in a first moment, prioritize the ethanol production and take advantage of the good scenario for the fuel – high prices and better production flow.

According to Unica (Brazilian Sugarcane Industry Association), until late March, at least 40 mills might be operating, considering more than 300 unities in the Central-Southern region.

Purchasers continue to report difficulties to buy Icumsa color until 150 sugar in the spot market, given that mills have been prioritizing to accomplish pre-scheduled contracts. Therefore, the impact of international decreases was mitigated. On March 14, the CEPEA/ESALQ Index of crystal sugar closed at 51.78 reais (22.02 dollars) per 50-kilo bag, edging up 0.56% in relation to February 28.

Concerning the spot market to export, trades moved at a slow pace in mid-March. The gap between asking and bidding prices is wide, hindering the closing of trades. Moreover, the supply is also limited. The ESALQ/BVMF Index closed at 52.80 reais (22.34 dollars) on March 14, for an increase of 0.84% in the first fortnight of month. This Index refers to the product at Santos port (does not include taxes; Icumsa color 150), which includes domestic sales and to export.

According to data from Cepea, sales in the spot market in SP remunerated 0.49% more than exports from March 10-14. While the CEPEA/ESALQ Index of crystal sugar averaged 51.86 reais or 21.99 dollars per 50-kilo bag, price quotes May 2014 delivery at ICE Futures would be equivalent to the average price of 51.61 reais or 21.88 dollars per bag. For this calculation, it was considered 75.37 dollars per ton FOB costs, 90.00 dollars per ton of quality premium and average exchange ratio of 2.3582 reais/dollar.

As for the price parity calculated by Cepea, crystal sugar remunerated 8% more than anhydrous ethanol in the second week of March in São Paulo state. For hydrous, the sugar advantage was 14% in the same period. (Cepea – Brazil)

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