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Sugar: production forecasts for Brazil increased

July 16, 2020 2:21 PM, Der AUDITOR
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BRASÍLIA. Brazil, the most important export country for sugar, will increase its production by almost 20% this season. The coronavirus pandemic is playing a decisive role in this.

Fuel production reduced

As the Brazilian forecasting authority Conab announced in its official estimates for the 2020/2021 season, sugar production is expected to increase by about 18.5% to 31.85 million metric tonnes. The main cultivation area, Center-South, where about 90% of Brazil's sugar cane is grown, will also increase its production by 18.5% to 31.85 million metric tonnes. Although the acreage for sugar cane is about 2% smaller than last year, more sugar cane is used for actual sugar production. Until now, a large part of the crop, namely about 65%, has been used for ethanol production. This year, the amount of sugar cane available for sugar production is expected to be about 8% higher. This is largely due to the coronavirus pandemic, which has drastically reduced the demand for oil and fuel and brought prices down significantly.

Price up and down

In February, sugar prices on the world market were marking a ten-year low. In the meantime, the situation has eased again, with price increases of up to 30% at times in June. However, market players reckon that prices will now remain at a stable level for the time being, as consumption is still restricted by the pandemic, which is particularly evident in the baking industry. Higher production in Brazil, the most important export country, should also prevent significant price increases. The prices for granulated sugar, EC Cat. II, medium are currently around EUR 0.44 per kg DDP Germany on the European spot market. Raw sugar is quoted on CBOT at around USD 0.26 per kg.

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