A sudden fire in Brazil’s sugarcane region has caused a surge in international sugar prices

The recent pressure brought by the repeated trading of Brazil’s bi weekly production data in the international raw sugar market has gradually shifted the focus of the raw sugar market to the production situation in the northern hemisphere at the end of the crushing season.

In the first half of August,Brazil’s production data was slightly lower than expected,with sugarcane crushing capacity in central and southern Brazil reaching 43.83 million tons,a year-on-year decrease of 8.57%;The sugar production was 3.109 million tons,a year-on-year decrease of 10.24%;Accumulated sugarcane extraction reached 377.44 million tons,a year-on-year increase of 4.83%;Accumulated sugar production was 23.91 million tons,a year-on-year increase of 5.41%.

Since late July,Brazil has entered the traditional peak supply season for sugar extraction,with continuous increase in supply.The biweekly production of over 3 million tons has brought market pressure,and the raw sugar futures market is more digesting the strong reality of the spot market.At the end of August,a large-scale fire broke out in Brazil,and the planting area of sugarcane affected by the fire is still under evaluation,with statistics ranging from 1 million to 2 million acres.After the fire,sugarcane can still be pressed,but the sugar loss is between 20%and 40%.For the 2024/2025 crushing season,burnt sugarcane needs to be replanted,which affects the quality of sugarcane.The Brazilian Sugar Industry Association(UNICA)is already assessing the impact of the fire,and the impact of weather risks on sugarcane production reduction needs to wait for further data to be calculated.The poor quality of sugarcane and the decrease in yield in the early stage have led to the expectation of early harvesting during the 2024/2025 crushing season in Brazil,supporting raw sugar prices.