Almost every company involved in sugar trading in Brazil has seen revocations. A trader at a prominent international commodities merchant informed Reuters on the sidelines of Sugar Week in New York last week. He calculated total cancellations at 200,000 to 400,000 tonnes of raw sugar.
Brazil exports about 2.2 million tonnes of sugar per month during the crop’s peak. Some traders display a significant fall in sugar production could lead to a global sugar deficit.
Most mills in Brazil are adjustable and can partially shift from sugar or ethanol production. Production is moving in favor of ethanol as high energy prices caused by epidemic recovery and war in Ukraine produce more fuel output.
Recent analyst projections indicate lower sugar output numbers and higher ethanol volumes due to biofuel sales have become more profitable for mills. Ethanol sales rose 2.6% in April.
Brasil is second in command in ethanol production
An executive at one of the largest mills in Brazil who requested not to be named said the gains from shifting from sugar to ethanol counteract the costs of cancellations. Brazil is the second-biggest ethanol producer after the United States.
Hydrous ethanol was trading at the match of a sugar price of 20 cents per pound late last week, while sugar futures in New York were changing a bit over 19 cents per pound.
Last season mills used 45% of the sugarcane crop to produce sugar and 55% to make ethanol. Every percentage point equals around 700,000 tonnes of sugar.
Sugar industry group UNICA data stated that the most inferior sugar mix was 34.3% in 2019, a year of low sugar prices. The highest was 49.7% in 2006 when higher prices succeeded.