Dec 28 / Lívea Coda

Sugar and Ethanol Monthly Report - 2023 12 28

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"Prices melted as a result of the recent shift in fundamentals. Brazil has proven that paying enough leads to major investments and capacity expansion, while demand might be more cautious than in previous years. As a result, the trade flows' deficit doesn't seem as deep as once expected, being easily settled through import seasonality, especially as market expect another year of excelent results in Center-South during 24/25."

S&D and Trade Flow

Prices melted as a result of the recent shift in fundamentals. Brazil has proven that paying enough leads to major investments and capacity expansion, while demand might be more cautious than in previous years.

As a result, the trade flows' deficit doesn't seem as deep as once expected, being easily settled through import seasonality, especially as market expect another year of excelent results in Center-South during 24/25.

Of course, weather will remain a source of volatility, as recent hot weather can impact cane's development in Brasil. However, the conversion to an ENSO-neutral condition in mid-2024 also allows some optimism regarding the Northern Hemisphere's 24/25 season - yes, it is too soon to peg.

Still, it seems like we are walking away from catastrophy. Higher future availability complies with an inverted curve, while higher availability from Brazil induces a small carry between October24 and March25.

Image 1: Total Trade Flow ('000t)

Source: hEDGEpoint

Image 2: Raw's Trade Flow ('000t)

Source: hEDGEpoint

Image 3: White's Trade Flow ('000t)

Source: hEDGEpoint

Image 4: Global Supply and Demand Balance (MT RV oct-sep)

Source: hEDGEpoint

Brazil CS

Image 5: Sugar Balance - Brazil CS (Apr-Mar Mt)

Source: Unica, MAPA, SECEX, hEDGEpoint

Center-South does not cease to amaze with excellent results. With nearly 640Mt crushed and 41.7Mt of sugar produced, the region already reached new records by December's first fortnight. 
If weather cooperates, the region will keep a good pace and reduce the possible cane leftover, impacting additional availability in 24/25.
The raws' meltdown reflects market pricing Center-South's results and 24/25 prospects.

Of course, weather plays an important role in cane crushing and development, and watching it closely became a must, especially given the recent high temperatures.

Image 6: Total Exports - Brazil CS ('000t)

Image 7: Total Stocks - Brazil CS ('000t)

Source: SECEX, Williams, hEDGEpoint

Source: Unica,MAPA, SECEX, Williams, hEDGEpoint

Brazil CS Ethanol

Image 8: Otto Cycle - Brazil CS (M m³)

Source: ANP, Bloomberg, hEDGEpoint

ANP data shows that demand growth is weaker than previously anticipated. October's Otto Cycle figures reached the same level as in 22/23, bringing annual growth estimates down to 4.6%.
Although Sales to the domestic market improved during December's first fortnight, the gap between production and consumption lingered, meaning stock building in the region and lower prices. 

In terms of pump parity, hydrous continues to be the cheaper option in most of the Center-South.

Image 9: Anhydrous Ending Stocks - Brazil CS ('000 m³)

Image 10: Hydrous Ending Stocks - Brazil CS ('000 m³)

Source: Unica, MAPA, ANP, SECEX, hEDGEpoint

Source: Unica, MAPA, ANP, SECEX, hEDGEpoint

Brazil NNE

Image 11: Sugar Balance - Brazil NNE (Apr-Mar Mt)

Source: MAPA, SECEX, hEDGEpoint

Between April and November 2023, NNE produced 1.85Mt of sugar. 
This means a 12.2% increase Y/Y pushed by increased cane availability, estimated at around 63 Mt, and a higher sugar mix. By March's end, total sugar production is estimated to reach 3.6Mt.

While rains might be beneficial for cane development, the region is just now leaving its crop peak, and more rains could disrupt the crushing rhythm.

Image 12: Total Exports - Brazil NNE ('000t)

Source: SECEX, hEDGEpoint


Image 13: Sugar Balance - India (Oct-Sep Mt)

Source: ISMA,AISTA, hEDGEpoint

India's government decision to restrict ethanol production through B molasses and sugar cane juice to 1.7B liters is in line with the no export expectations: the country is set to prioritize sugar restocking. 
Raising our total production to nearly 32Mt, stocks should reach 6.7Mt in 23/24, still below the 3-month consumption level.

Meanwhile, 23/24 season started. Some regions before and others later, but a total of 7.4Mt were crushed by the country until December 15th. This represents a drop of 10.7% compared to 22/23, with the same amount of operating mills.

Image 14: Total Domestic Exports - India ('000t w/o tolling)

Source: ISMA,AISTA, hEDGEpoint


Image 15: Sugar Balance - Thailand (Dec-Nov Mt)

Source: Thai Sgar Millers, Sugarzone, hEDGEpoint

The 22/23 crop season came to an end and the country reached 11.1Mt of sugar produced and 7.37Mt of exports. These were excellent results compared to recent years.
Thailand mills started the 23/24 season around December 10, about ten days later than in 22/23.

Until the 16th of December, the country has produced 192,7kt. By the same time in 22/23, Thailand had already produced 397kt, which means an annual drop of nearly 50%.

Image 16: Total Exports - Thailand ('000t)

Source: Thai Sgar Millers, hEDGEpoint

EU 27+UK

Image 17: Sugar Balance - EU 27+UK (Oct-Sep Mt)

Source: EC, Greenpool, hEDGEpoint

Although we haven't changed our 23/24 crop estimates, following the European Commission's latest report, there is a downward pressure on the Old Continent availability.
The 23/24 harvest has not been an easy one. Beet quality was affected by the lack of sunlight during development, late planting, and heavy rains. If not enough, December was particularly cold in some regions, such as Germany.

The extent of its impact is still unclear, especially given the recent weather improvement, but could mean a reduction in the next revision.


Image 18: Sugar Balance - Mexico (Oct-Sep Mt)

Source: Conadesuca, Greenpool, hEDGEpoint

Harvest started in October and, so far, 3.3Mt of cane has been crushed, around 155kt more than in 22/23 but with a major drop in yields.
While last season's cumulative cane yield reached 78.5t/ha, in 23/24 this measure dropped to 73.9t/ha inducing an already lower sugar production despite having crushed more cane.

A total of 264.2kt of the sweetener were produced, and, until November, only 19kt were exported, compared to nearly 33 last season and over 100kt in 21/22.

Image 19: Total Exports - Mexico ('000t)

Source: Conadesuca, Greenpool, hEDGEpoint


Image 20: Sugar Balance - US (Oct-Sep Mt)

Source: USDA, hEDGEpoint

We remain more pessimistic than USDA regarding Louisiana, keeping our production estimate stable at 8Mt for 23/24.

On November 30, the US Trade Representative (USTR) announced the reallocation of 224kt raw sugar tariff-rate quota (TRQ), due to the drought that has affected its cane-producing region and Mexico's availability restrictions.

The volume was distributed among some countries. For instance, Brazil NNE received an aditional 53kt, Autralia 30kt and Guatemala 17kt.


Image 21: Sugar Balance - Guatemala (Oct-Sep Mt)

Source: Cengicaña, Sieca,,Greenpool, hEDGEpoint

We kept our production expectation unchanged at 2.44mt - a 3% reduction compared to 22/23.
The season started in early November and through its 6 first crushing weeks already shows signs of stress. Total sugar production reached only 387kt, according to CENGICAÑA, 9% lower than the same period last year and 19% below 21/22.

Image 22: Total Exports - Guatemala ('000t)

Source: Sieca


Image 24: Sugar Balance - Russia (Mt Sep-Aug)

Source: Ikar,, Greenpool, hEDGEpoint

According to Russias Ministrty of Agriculture, gross sugar beet harvest was of 52.2Mt. 
This allows the production of 7Mt of sugar this agricultural year, meeting the country's needs and forming a good carryover stock for the next season. The volume also complies with higher exports to partner countries.
Untill December 18th, Russia has processed nearly 40Mt of beet and produced around 5.5Mt of sugar. Warmer weather adds to the possibility of reaching 7Mt.


Image 25: Sugar Balance - China (Oct-Sep Mt)

Source: GSMN, CSA, Refinitiv, Greenpool, hEDGEpoint

Obs: stocks also account for bonded warehouses volume and imports include syrup and smuggling estimates

China produced 890kt until the end of November, a 5% increase compared to last season. This trend aligns with expectations, making a recovery to 10Mt feasible.

In terms of imports, although closed, the country has expanded it by 9%, reaching 1.36mt imports in 23/24. We revised our total imported volume up to 4Mt (exc. syrup and smuggling).

However, it remains lower than in previous years when the parity was fairly open. We expect the import rhythm to slow down during the peak of the crop.

Image 26: Total Imports - China ('000t - exc. syrup and smuggling)

Image 27: Total Production - China ('000t)

Source: GSMM, hEDGEpoint

Source: CSA, Refinitiv, Greenpool, hEDGEpoint

Weekly Report — Sugar and Ethanol

Written by Lívea Coda
Reviewed by Natália Gandolphi

Sugar and Ethanol Desk

Murilo Mello
Vipul Bhandari
Gabriel Oliveira
Etori Veronezi


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