PRODUÇÃO DE AÇÚCAR CAI 7.7%, QUEM SE IMPORTA?

UNICA made it public that the crushing of the Center-South in the second half of May reached 45.2 million tons of sugarcane, a reduction of 3.4% against the same period last year. The sugar production, which got up to 2.7 million tons in the fifteen days, was also 7.7% smaller compared to the same period the previous year. The sugar mix in the fifteen days was smaller than last year’s. Although these numbers might seem promising, it’s important to clear some points up before adopting an optimistic view. For starters, if we analyze the accumulated crushing volume in the crop so far, it is 140.7 million tons of sugarcane, almost 12% larger than the 2023/2024 crop. This volume is the largest of the last four years, losing just to the accumulated in the 2020/2021 crop. Over the last 10 years, the accumulated volume until the second half of May has represented on average 21.4% of the crushed total in the respective year. Excluding the extremes, the average is still the same, suggesting that the 2024/2025 crop can be as large as the record crop of 2023/2024, which was 654 million tons of sugarcane. Therefore, caution is made necessary. Over the last week, sugar performance in New York has been positive in the three first maturities. The July/2024 contract closed out the week at 19.35 cents per pound, 35 points above the previous Friday’s close (equivalent to an increase of 7.70 dollars per ton). The October/2024 and March/2025 contracts closed out stronger, with increases of 55 and 46 points, 12 and 10 dollars per ton over the week, respectively. However, the longer maturities, from May/2026 on, closed out from 5.50 to 10 dollar per ton down. This might have been caused by the weakness of the Brazilian real, which created fixation opportunities in real per ton for the sugar of these crops. The weaker real made export sugar fixation more appealing for the maturities in the two next crops. Lula’s weak government and the perception the market has that the president is disoriented,  suffering constant defeats in the Congress takes a toll on the Brazilian real. Lula is focused on just spending and promoting his megalomaniac ideas. The imbroglio with   the PIS and Cofins provisional measure caused the Brazilian entrepreneurs to protest strongly, which put an end to the increase of the tax burden. And, as an economist and our reader put it, “Brazil is no longer a country of opportunities for the ordinary citizen (non-political or non-servant),