Cepea: New Sugarcane Harvest Season Limits Crystal Sugar Liquidity
Brazil's spot sugar market saw reduced activity last week, according to Cepea. The crystal sugar price index closed at R$95.04 per bag on Friday, marking a 1.6% drop from the previous week and a 3.3% monthly decline. Researchers note that lower liquidity is typical at the start of a new harvest season, as buyers fulfill existing contracts and sellers adjust to the new production cycle. Transactions are currently focused on darker, lower-quality sugar, while higher-quality sugar supply remains tight.
Brazil's spot sugar market experienced a slowdown in activity last week, as reported by the Center for Advanced Studies in Applied Economics (Cepea) at Esalq-USP. On Friday, the Cepea/Esalq Crystal Sugar Index closed at R$95.04 per bag. This figure represents a 1.6% decrease from the previous week's closing price of R$96.59 per bag, and a cumulative monthly decline of 3.3%.
According to Cepea researchers, reduced market liquidity is a common occurrence at the beginning of a new harvest season. During this period, buyers are typically focused on fulfilling previously established contracts, while sellers are in the process of adjusting to the new production cycle and market dynamics. This transitional phase contributes to the lower trading volumes observed.
Furthermore, Cepea noted that current transactions are predominantly concentrated on darker-colored (lower quality) sugar, with the supply of higher-quality crystal sugar remaining restricted. In a statement, researchers explained, “In this context, mills have been resistant to accepting lower prices, which explains the low liquidity.”
The research center also indicated that a more consistent recovery in domestic sugar prices would depend on external market signals, particularly a firmer appreciation of the No. 11 sugar contract traded on the New York Stock Exchange (ICE Futures).