The New York sugar futures market ended the week with the March 25 contract price at 22.10 cents per pound, recording a slight decline of 4 points compared to the previous week. Maturities for the 2025/26 harvest in the mid-south, which includes contracts from 25 May to 26 March, remained practically stable. Overall, the market presents a calm scenario, with no relevant news on the near horizon, indicating that we are entering a period of stability that could continue in the coming weeks.
The movement of speculative money brought a prominent element. These agents reduced approximately 40% of their long positions. According to the Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC), based on last Tuesday’s positions, funds held 31,303 contracts in a long position. This decline indicates that speculators are taking a more cautious stance in the absence of new factors that could affect prices in the short term.
In the field of production, the “Unica” data published last Thursday dispelled fears of the “sudden death” of the crop, which was widely discussed in previous months. Current forecasts indicate that the harvest should reach between 595 and 605 million tons of sugarcane, a figure that reflects the consensus of market participants. This eliminated the possibility of significant upward pressure on prices before the start of the next harvest season. However, spreads still show stability, suggesting that market agents expect a delay in the start of the 2025/2026 harvest season.
During a traditional canablan event held in RibeirĂŁo Preto, preliminary forecasts for the upcoming harvest season in Central-South were released. These forecasts take into account a slight increase in total sugarcane planting area, a decrease in harvest area – with the end of sugarcane cultivation and increased use of seedlings to regenerate sugarcane fields – as well as sugarcane field aging, which may impact productivity. Other relevant information is that it is estimated that crushing should start later, perhaps in April or May 2025. Taking into account these variables, Canaplan expects a harvest of between 566.3 and 577.5 million tons of sugarcane, which, if confirmed , could support the upward bias in sugar prices.
The international scenario also reinforces the importance of Brazilian sugar in the global market. India, one of the world’s major producers, faces challenges in producing and exporting sugar. The expansion of the country’s agricultural area is uncertain, due to factors such as fluctuations in the prices of grains and other agricultural commodities. Meanwhile, India’s domestic sugar consumption is growing faster than production, which could push the country to become a net sugar importer in the next three to four years. This imbalance could create a bottleneck between global supply and demand, strengthening Brazil’s position as an essential supplier in the international market. Over-reliance on a large supplier leads to price fluctuations.
The rise of the dollar against the riyal also affected the market during the week, with an increase of 0.33%. The March 25 New York contract, converted into reais per ton, approached R$3,000, prompting many mills to review their inventories to check if there was still sugar available for sale by the end of the year, considering that much Production is already steady and committed. This move is an attempt to benefit from rising prices and ensure additional revenues in the short term.
In the oil market, prices remain relatively stable, with WTI trading at $72 per barrel and Brent crude at just above $76. This scenario leaves room for Petrobras to adjust the price of gasoline by up to 17 cents per litre. But since part of this difference is due to exchange rate fluctuations, there are no expectations of corrections in fuel prices in the short term.
Operational data from the ongoing harvest confirms the good performance so far. In the first half of October, 33.8 million tons of sugarcane were processed, an increase of 2.75% over the same period of the previous year. Sugar production reached 2.4 million tons, an increase of 8% compared to the same period last year. Anhydrous ethanol production recorded a remarkable growth of 14.63%. Sugarcane quality also showed significant improvement, with the ATR index registering a 10% increase. However, the production mix allocated to sugar decreased slightly, moving from 48.12% during the same period last year to 47.28% during the current two weeks.
In the harvest so far, 538.85 million tons of sugarcane have been processed, and sugar production has reached 35.59 million tons. Anhydrous ethanol production reached 9.815 billion liters, representing a decrease of approximately 5% compared to the previous year. On the other hand, hydro-ethanol production showed remarkable growth, reaching 17.391 billion liters, an increase of 16.81%. The accumulated ATR reached 142.23 kg per ton of sugarcane, reflecting the quality of the crop. The production mix is ​​relatively balanced, with 48.74% of sugarcane allocated to sugar production and 51.26% to ethanol.
Technical Analysis (by Marcelo Moreira): The March 25 contract closed at 22.14 cents per pound, near the 9-day moving average of 22.16 cents per pound. In the short term, resistance is located at 23.00/23.33/24.47 cents per pound, while important support levels are located at 21.00/20.69/20.19 cents per pound. The market remains upside down until the next expiry date on October 25! It is important to monitor the spread “July/25 x October/25”, which is also inverted at -22 pips.
* Risk Manager for the Agricultural Commodities Market and Managing Partner of Archer Consulting.
Fonti: Archer Consulting
