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Rise in Brazil’s Sugar Output May ‘topple’ Global Market

4 Jul 2020 2:33 pm
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Mumbai (Commodities control) - There is growing concern that if the Brazilian ethanol market remained weak, the global sugar market could be flooded, which would send sugar prices plummeting.

Sugar prices on Thursday settled mixed with NY sugar at a 1-1/2 week high. NY sugar recovered from early losses Thursday and matched Wednesday's 1-1/2 week high on strength in crude oil. However Sugar prices on the Intercontinental Exchange ended down 4.6% for the week ended 26th June. In recent months, global demand for fuel has declined by an estimated 28%, which resulted in a sharp fall in ethanol production and subsequent widespread shutdowns of plants. Global lockdown measures to contain the coronavirus disease (COVID-19) pandemic, coupled with an oil price war between Russia and the Organization of the Petroleum Exporting Countries (OPEC), have been blamed for this dramatic negative impact on the global transportation fuels sector. However, a rapid recovery in demand recently has seen oil prices rise, while the ethanol market has seen sales improving in recent weeks to only 10% below volumes seen in the same period a year earlier. This is compared with a drop of more than 50% in the first weeks of the lockdowns. In Brazil, sugar production continued to increase, reaching a near-record 47% increase early in June, and according to the government crops supply agency, Conab, the country’s sugar production for the year was set to climb to 35.3 million tons, up from 29.8 million tons last season. Some international industry experts were now raising concerns that overzealous sugar production in that country could drive down global prices even as ethanol demand increased.

       
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