Drought Risks Impact on Brazil’s Sugarcane and Worldwide Sugar

Brazil faces an expected shortfall in sugarcane harvest next month, with dry conditions posing a significant threat to crop development.

Plinio Nastari of Datagro highlighted that weak spring rainfall could degrade sugarcane quality for the second half of the year.

An early-year drought has already prompted mills to postpone harvesting.

Early-season productivity may initially seem promising, but Ulysses Carvalho from Sucden predicts a steep decline in yields as the season progresses.

Crops harvested late in 2023 are particularly vulnerable, needing water for growth.

This issue alarms the raw sugar market, as Brazil’s global export share has expanded, especially with India’s export limits.

According to Carvalho, Brazil was responsible for 75% of raw sugar trades last year. Brazil might have less sugar to export from October, a crucial period.

Ricardo Alves from Raízen notes this could intensify the global supply shortfall, especially with India’s expected weak harvest.

Bloomberg’s compilation from nine traders and analysts forecasts a 3% decrease in production to about 41 million tons in the South-Central region compared to last year.

Wilmar International’s estimates stand out, predicting production could hit between 42.5 and 44.5 million tons.

The company’s recent large sugar shipment to settle a futures contract surprised traders.

Less sugarcane directed towards ethanol production could slightly ease sugar supply pressures.

However, Guilherme Correia from Louis Dreyfus warns climate risks might lead to further cuts in harvest forecasts.

“Events in Brazil directly influence New York’s prices since no other source can fulfill global demand,” Correia explained, emphasizing Brazil’s pivotal role in the sugar market.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error