ICE Sugar Prices Rise as Brazilian Mills Prioritize Ethanol Production
ICE raw sugar futures rose on Wednesday, recovering from a five-year low hit last Friday. This surge is primarily attributed to Brazilian mills diverting more sugarcane to ethanol production rather than sugar, influenced by ethanol price fluctuations, which in turn tightens sugar supply. White sugar futures also saw an increase.
On Wednesday, sugar futures traded on the Intercontinental Exchange (ICE) saw an increase, moving away from the five-year low recorded last Friday. The May raw sugar futures contract closed up 0.14 cents, or 1%, settling at 13.57 cents per pound.
Rabobank highlighted that the biggest surprise in the sugar market was the sharp decline in ethanol prices in Brazil, which fell by 7% in the week leading up to April 17. This downturn is likely a reflection of accelerated sugarcane harvesting and increased ethanol production. Sugar mills in major producing countries like Brazil and India have the flexibility to utilize sugarcane as a raw material for either ethanol or sugar, depending on which commodity offers a better profit margin.
Concurrently, the most active white sugar contract also saw an uptick, rising by 0.4% to $423.70 per tonne. This market movement indicates that concerns over sugar supply and the strategic shifts in mill production are influencing global sugar prices.