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White sugar premium in Brazilian equivalence at the highest historical price

Highlights

White sugar premium hit Real 702.33/mt

Brazilian white sugar exports can surpass 4 million tons

Santos — Brazilian producers might be encouraged to maximize production of 45 icumsa refined sugar in the 2020-21 Center-South crop, as the white sugar premium traded at Real 702.33/mt, the highest historical level using the Brazilian currency.

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The upward price movement started in February 14, when the WP settled at Real 322.70/mt, and since then, the premium paid for the Brazilian refined sugar in the export market surged in 117.64%.

Over the same period, the premium of white sugar over raw sugar traded on ICE NY11 futures in dollars moved roughly 60% from $75.18/mt to settle at $120.26/mt on Thursday, a considerable increase, but not that relevant for Brazilian producers, the global largest sugar exporters.

The main price trigger has been the strong depreciation of the Brazilian real against the dollar, with the real reaching its weakest value in history at Real 5.84/$1 on Thursday, adding a tremendous support for Brazilian sugar exporters.

In the 2019-20 crop, which ended on March 31, Brazil exported 2.04 million mt of white sugar, of which just 100,000 mt were refined sugar and the balance crystal, according to line-up numbers.

For the current crop, market sources estimates that the exportable volume can more than double, considering the combination of a positive pricing scenario and good liquidity in the export market, the opposite of the weaker demand in the domestic market.

The latest vessel line-up from Paranagua, the only port in the CS region with infra-structure to export breakbulk cargoes, was showing that 114,900 mt of white sugar was expected to be exported May 16-June 23. That number is 45% of the total volume of white sugar exported in breakbulk in 2019.

With coronavirus lockdown measures imposed in India, the second-largest global sugar producer, market participants were estimating that Brazilian white sugar could start to reach new end-consumers, such as East Africa, typically buyers of Indian sugar.