Widespread fires in Brazil have affected sugarcane crops in São Paulo, the country’s leading sugar-producing state, leading to a surge in international sugar prices. On Tuesday, October NY world sugar #11 (SBV24) closed up by +0.56 (+2.94%), and October London ICE white sugar #5 (SWV24) closed up by +22.30 (+4.24%). However, raw sugar futures slipped from the previous session’s five-week high on Wednesday.
The sugarcane industry organization Orplana reported that approximately 2,000 fires over the past weekend impacted up to 60,000 hectares of sugarcane fields in São Paulo. Green Pool Commodity Specialists estimate that these fires could have resulted in a loss of up to 5 million metric tonnes of sugarcane.
The market is continuing to assess the extent of the damage to sugarcane fields from fires in the Center-South region of Brazil.
Julian Price, Sugar Trade Analyst and Executive Director of the ACP/LDC Sugar Industries Group, noted that we will have to see what the extent of the damage is, which will take time to assess for those in Brazil who are best places to make that assessment.
He said, “The pictures we’ve seen seem awful – almost biblical – and I read that estimates are that five million tonnes of cane have been affected. But to put it in perspective, that would be only about 1% of the amount of cane expected from this harvest. But the fires do rather dramatically illustrate the negative impact of the dry weather which is persisting in Centre South Brazil. Also, I think we’ve long feared that with the global S&D finely balanced, very probably a deficit situation, and the global supply so very dependent on Brazil this year, anything that goes wrong in Brazil will have a big effect on the market.”
Regarding whether it is a good time for India to allow sugar exports, he stated, “For Indian exports, I have to say I think this is a long term issue and best solved by transparent policy-making; you shouldn’t react to short term market movements when considered long term policy decisions.”
On Wednesday, industry group UNICA reported that sugar production in Brazil’s key Center-South region totaled 3.11 million metric tonnes in the first half of August, marking a 10.24% decline compared to the same period last year. UNICA’s report also indicated that sugarcane crushing during this period fell by 8.57% to 43.83 million tonnes.
As per reports, São Paulo Governor Tarcisio de Freitas mentioned that firefighters had successfully extinguished the fires by Monday but said 48 municipalities would remain on high alert to prevent new outbreaks.
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