Sugar/CEPEA: Season Start Limits Market Liquidity

According to the Center for Advanced Studies in Applied Economics (CEPEA) at the University of São Paulo, the Brazilian sugar spot market experienced a notable slowdown in trading activity last week. Researchers indicate that reduced liquidity is a common occurrence at the beginning of the harvest season. During this period, buyers are typically focused on fulfilling previously established contracts, while sellers require time to adapt to the new production cycle and adjust their sales strategies. CEPEA further reports that current market transactions are predominantly concentrated on darker-colored, lower-quality sugar products. Concurrently, the supply of higher-quality sugar remains relatively restricted. In this market environment, sugar mills are generally reluctant to accept lower price offers, which further explains the prevailing low market liquidity. The research center also emphasizes that a more consistent recovery in domestic sugar prices will largely depend on positive external market signals, particularly a firmer appreciation in international sugar prices.